September 17, 2015 / 5:01 PM / 4 years ago

Fiat Chrysler-union proposed pact would narrow pay gap: sources

DETROIT (Reuters) - All Fiat Chrysler Automobiles (FCAU.N) (FCHA.MI) plant workers will get raises that narrow but do not eliminate the pay gap between veterans and recent hires in a proposed four-year labor contract agreed Tuesday, several sources said.

Fiat Chrysler Automobiles (FCA) CEO Sergio Marchionne (R) and United Auto Workers (UAW) union President Dennis Williams announce a tentative agreement during a news conference in Detroit, Michigan, September 15, 2015. REUTERS/Rebecca Cook

Second-tier workers will still make about $5 less per hour by the end of the pact’s four-year term than more veteran plant workers represented by the United Auto Workers, the sources said. They asked to remain anonymous because the full union membership has not yet been appraised of the contract’s details.

However, bonus pay linked to quality and other factors will help the lower-paid workers further narrow that gap, the sources said.

The UAW could not be reached for comment on Thursday, but has previously said it will not comment on the new contract until it can directly inform its members. The pact will go to a ratification vote of UAW members at FCA in the coming weeks.

The proposal also agrees in principle to work toward a healthcare cooperative among all active UAW members at the Detroit Three automakers.

If the proposed contract is ratified, UAW Fiat Chrysler workers will get a signing bonus of $3,000, down from a signing bonus of $3,500 in 2011, the sources said.

About 40,000 Fiat Chrysler employees are represented by the U.S. union, and of that figure, about 36,600 are plant workers paid by the hour in a two-tiered compensation structure.

Veteran workers, who have not gotten a raise in a decade, will get a percentage hourly pay increases in the course of the contract that will put them above $30 per hour, as well as lump sum payments, the sources said.

Second-tier workers, who started working for the former Chrysler Group LLC in 2010, now account for about 45 percent of Fiat Chrysler’s hourly workforce. They now make $15.78 upon hiring and over time are raised to $19.28 per hour.

The new contract, which must be ratified by a vote of the 40,000 Fiat Chrysler UAW members, calls for the new starting pay to be just over $17 and top out around $25 after four or five years, the sources said. Those with that much experience now will go directly to the $25 level, they said.

One source with knowledge of the proposed contract’s terms said he expects workers who wanted the pay gap eliminated are likely to vote the pact down.

Bloomberg News earlier reported pay and bonus details of the proposed contract.

Reporting by Bernie Woodall. Editing by Joseph White and Andrew Hay

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