After a near collapse of the United States automobile industry and record bailouts by the U.S. Government, automakers are offering huge bonus payments to their UAW employees. Workers believe the move is justified because they made equally large concessions to help their employers get through tough times. The payments are being made in advance of new contract negotiations where the companies are expected to ask union workers to give up their cost of living adjustments in favor of gain-sharing plans.

QUESTIONS:

1. Discuss the strategic reasons behind the desired shift from cost of living adjustments to gain sharing.
2. The article mentions several forms of increasing pay. These include cost of living adjustments, profit sharing, and gain sharing. Compare and contrast the three approaches. Discuss the benefits and risks for workers associated with switching to a gain-sharing plan.
3. With collective bargaining on the horizon, why are Chrysler and General Motors offering generous profit-sharing payments?

SOURCE: B. Snavely, “Autoworker Bonuses Part of Detroit 3 Strategy for UAW Talks,” USA Today (Retrievable online at http://www.usatoday.com/money/autos/2011-02-05-uaw-bonuses_N.htm)