OK, I'm not an economist . . . but I really don't understand how the proposed GM/UAW deal helps either party (and especially the UAW):
The contract’s main feature — a health care trust called a voluntary
employee benefit association, or VEBA — means that G.M. will no longer
have to carry the debt it will owe for employee and retiree health care
benefits on its books. Earlier this year, G.M.’s chief executive, Rick
Wagoner, referred to those obligations as “very large and frankly
formidable.”
That debt is estimated at $55 billion for the next
80 years. So G.M. will establish the trust with about 70 percent of
that amount, making an upfront payment of cash, stock and other assets.
The difference is expected to come from gains on investments by the
trust.
I mean, GM still has to put up the money, so how does this cut their costs? And if it turns out that the VEBA fund is grossly inadequate to cover health care costs in, say, the year 2027, then what is the recourse for GM retirees and employees?
Yeah, I understand that by getting that obligation "off the books," GM's debt rating may improve, thereby saving the company some interest charges on money it borrows; in other words, this is essentially an accounting trick. I also understand that the union got some "guarantees" that GM will continue to operate its plants in the US; sounds kinda vague to me.
Jerry Mead-Lucero of PilsenProle sums up my suspicions pretty well:
Some analysts are arguing that some retiree health care funds under
union control is better than no retiree health care funds if GM
eventually goes bankrupt. But the truth of the matter is the UAW has
accepted an under funded retiree health care package that will be a
boon for GM and its investors, but might very well spell disaster for
retirees in the future. GM has been let of the hook, and the union has
taken on a tremendous burden. Increased co-pays and benefit reductions
are a practical financial certainty. As Greg Shotwell of SOS points
out, at least there are legal and contractual obligations with the
retirees and GM under the current arrangement. It is a very dangerous
gamble, with market forces, and talents and trustworthiness of UAW
money managers playing a huge role in the success or failure of the
plan. And if it fails, the workers will have the UAW to blame, and not
GM.
In other words, the union appears to be giving up its bargaining rights when it comes to setting future health benefit levels. If it turns out that the VEBA isn't covering workers and retirees adequately, what is the union to do? It can't address matters like co-pays, deductibles, coverage exclusions, caps and benefit limitations in future contract negotiations, because GM no longer is responsible for these matters.
This country is in such desperate need of a real working class victory.
After decades of being beaten down by declining real wages and benefits
cuts – longer work days and less control over conditions of work–
de-industrialization and corporate globalization – the U.S. working
class is demoralized, degraded and disempowered. We need a break, a
turning point, a line in the sand. We need a battle of Gettysburg &
Vicksburg, of Midway & Stalingrad, in the class war that we are so
badly losing right now. We need the UAW of the 1930’s sit-down strikes
which checked the power of capital for decades. Or at least the UAW of
the 1960’s with it’s commitment to social movements and civil rights.
Instead what we got is the UAW of the 80’s and the 90’s, and one more
in a long line of concessionary contracts. One more nail in the coffin
of the U.S. industrial working class.
Indeed. Somehow the more aggressive, confrontational spirit of the labor movement has been replaced with weary acquiescence. That's bad not only for unions and their members, but bad for democracy as well.