DETROIT (Bloomberg) -- Fiat Chrysler Automobiles can double its use of lower-paid temporary staffers under a new labor agreement being voted on by the UAW, two people familiar with the matter told Bloomberg.
Savings from that concession helps offset big raises given to almost half of the company’s unionized U.S. hourly employees.
More than 250 pages into the tentative labor agreement between FCA and the UAW is language that lets the company use temps any day of the week instead of just Mondays, Fridays, weekends and holidays. That means FCA could double the use of temporary staff from 4 percent of work hours to 8 percent, said one of the people, who asked not to be identified because the estimate isn’t public.
The new rules on temps weren’t in highlights distributed to union members, who are scheduled to vote on the deal next week.
Temporary workers have been a contentious issue with the UAW because they make less than entry-level workers, get fewer benefits and can be terminated at any time. The UAW has called out Nissan Motor Co.’s use of temps at U.S. plants it’s trying to organize.
In December, UAW President Dennis Williams called the practice a “shell game” to keep pay low.
The contract says that negotiators held “lengthy discussions” about the use of temporary employees before agreeing that under certain circumstances, it was mutually beneficial. UAW spokesman Brian Rothenberg and Shawn Morgan, a spokeswoman at Fiat Chrysler, declined to comment.
Trade for raises
The UAW may have had to agree to more temporary workers as a way to reduce costs and secure better pay for the existing full-time employees, said Kristin Dziczek, director of the industry and labor group at the Center for Automotive Research in Ann Arbor, Mich.
“This will cause some tension with the membership,” Dziczek said in a phone interview. “Taking on more temps is part of the compromise to get the tentative agreement and they could agree to more for a new deal. FCA has a limit on what they will spend on labor.”
UAW temps, who pay dues to the union, can earn as much as $22 an hour under the new contract, which provides a path for entry-level, or Tier 2, workers to earn the same $29 an hour veteran workers will get. FCA also gives temporary workers fewer benefits. They don’t get a pension plan or prescription drug, dental or vision coverage that full-timers get, according to the temporary agreement.
Using temps isn’t all bad for UAW members, because it allows them to take vacation time and long weekends. The new contract lets members take single days of vacation for the first time. But traditionally, the union has tried to limit the number of temps so the company must hire more full-time people to cover for absences.
FCA’s UAW workers voted against the first tentative agreement in part because they weren’t happy with how it deals with Tier 2 workers.
Under that deal, the newer employees could reach $25.35 an hour up from a maximum of $19.28 in the previous contract. Veteran workers who started before the 2007 UAW contract make $28 an hour and would get close to $30 over the next four years.
Temporary workers are also a sore spot for Detroit’s carmakers, who point out that Nissan and Toyota Motor Corp. have many more temps in their plants than they do. That lowers their costs and allows them more flexibility to reduce staff and save money during a downturn.
Toyota gets 10 percent to 20 percent of its labor done by temporary workers and Nissan gets as much as 40 percent of its labor done by temps, according to research from CAR.