Update: GE workers have approved the new contracts. For more details, see the comments.
GE and its two largest unions, IUE-CWA and UE, on Sunday reached a tentative agreement on a new four-year contract. “While the proposal contains important improvements and advances, it also contains certain disappointments,” said John Hovis, president of UE. “However, given the current economic climate overall it’s an agreement we can support.”
Delegates from UE locals will begin reviewing the agreement on Tuesday, and delegates from IUE-CWA locals will begin Wednesday. Delegates from both locals will vote Wednesday on whether to accept or reject the agreement. If the delegates vote to accept the agreement, then members will vote on it. The membership vote should be complete no later than June 30.
Hovis said that there are many changes to the new agreement, and he wanted to make sure that local leaders and members have plenty of time to read and discuss the new contract. UE will post a detailed summary of the agreement on Wednesday afternoon. IUE-CWA has already posted a short summary of the agreement.
The tentative agreement increases pay, increases worker health care expenses by 2.5 percent, keeps intact the special early retirement option for workers facing layoffs, and boosts pension payments. It also allows GE to move new hires into a defined contribution pension plan.
If approved workers would receive a cash payment of $5,000 in July, then a 2.25 percent pay increase in 2012, 2.5 percent in 2013, and 3 percent in 2014. There will also be eight opportunities for cost of living increases during the course of the contract that could raise wages by as much as $1.13 an hour.
The tentative agreement also establishes a health plan for union workers that is separate from the health plan for salaried, non-union workers, who pay 35 percent of their health care costs. The new plan for union workers will increase out-of-pockect health care costs from the current level of 21.5 percent to 24 percent.
New hires will no longer be allowed to enroll in GE’s defined benefit plan, which provides a guaranteed pension benefit for the lifetime of the worker. Instead, they will be diverted into a 401(k) plan, also known as a defined contribution plan. There was some concern that barring new hires from the defined benefit pension plan would lead GE to demand a freeze in pension payments for workers already enrolled in the defined benefits plan, but the company said that it would not ask for a freeze when bargaining on a new contract begins in 2015.
For the new hires, GE agreed to make an automatic payment of $600 into the 401(k) plan plus contribute 3 percent of a new hire’s salary to the 401(k) plan. In addition, GE will match new hire contributions to a separate savings plan up to 8 percent of wages.
Seeking to shed its legacy costs, GE made barring new hires from the defined benefits pension plan a top priority and refused to budge on this issue.