General Motors announced Thursday it would cut wages in order to preserve cash-on-hand through the growing economic crisis. Jalopnik reports that an e-mail tip gave employees details on the upcoming pay reduction scheme through an internal website.
According to the information on hand, GM plans to cut salaried employees’ pay by 20 percent effective April 1. Executives will take a bigger pay cut of between 25 and 30 percent depending on their seniority, including the company’s board of directors. “Compensation statements will be made available. The process varies by country, and acknowledgement may be required,” the site says. While the pay cut will affect employees pretty much immediately, GM insists it is a temporary measure, and that the deferred wages “will be re-paid in a lump sum, with interest, between the 4th quarter 2020 and no later than 1st quarter 2021.”
The news comes as Fiat Chrysler Automobiles, N.V. laid off 2,000 contract workers earlier this week as a result of the coronavirus pandemic. All Big Three automakers have currently halted production through at least mid-April, as the virus continues to infect more people in the United States.
A more detailed statement says those employees who are currently working from home will receive a lump-sum payment no later than March 15, 2021.
For those who cannot work from home, the Jalopnik report points out another policy, referred to as “Salaried Downtime Paid Absence”. The company mentions some 6,500 employees who can’t work remotely — and those workers will get a flat 25 percent salary reduction. “In the U.S., the majority of these employees are in salaried manufacturing or engineering roles.” Per GM’s official statement, the pay cut comes in lieu of employees needing to seek unemployment benefits.
A company spokesperson said that, “We need to preserve cash during the crisis because we have so little production around the world, but we also want to keep the team together.” The company said healthcare benefits would not be affected, and said it would result in “significant” cash savings, but did not mention a specific amount.
Thanks to Jalopnik for providing this information.