The United Auto Workers (UAW) said it will not make “serious progress” on wage negotiations with Detroit’s three major automakers, including General Motors (GM), Ford (FORD) and Stellantis, by noon ET on Friday (22nd). Announced that it will be launched in more factories on the same daystrike, Experts believe that this labor dispute has the biggest impact on the economy on inflation.
UAW President Finn said in a video message on the 18th: “We will not wait indefinitely for them (the Detroit Big Three) to delay.” “So, noon on Friday, September 22nd is the new deadline.” The union plans to expand the scope of the strike, depending on the progress of the latest talks, he had earlier said.
A union representative previously said that before the union started the strike on the 14th and put forward the proposal, none of the three major car manufacturers made a new offer. The employer’s proposal included a 20% increase in hourly wages. Includes raises, thousands of dollars in bonuses and other benefits. The workers’ key demands include a 40% increase in hourly wages, reducing weekly working hours to 32 hours, and a return to traditional work.pensionsystem, eliminate the salary grading system, and restore the cost-of-living adjustment mechanism.
Some media reported that Stellantis had made a new offer, but Bloomberg News quoted people familiar with labor negotiations as saying that the offer negotiated by the two sides was still the UAW’s proposal. Stellantis said on the 18th that it had resumed negotiations and had “constructive” discussions with union representatives demanding “normalcy”.
The UAW has begun a strike on the 15th with approximately 13,000 workers at assembly plants owned by General Motors, Ford and Stellantis.LaborAfter participating in the strike, General Motors and Ford announced layoffs of non-striking workers, citing the impact of the strike at three plants.
Additionally, Ford is facing the threat of a strike at its Canadian factories. The Canadian Auto Workers Union (Unifor) said the contract with Ford expired at 11:59 midnight EST on the 18th. Although the talks were “constructive”, he would not be able to retire after retirement. Substantial progress has not been made on key priorities such as wages and salary increases, and negotiations with Ford will continue until the deadline. If final terms are not finalized, “we will launch a strike.”
MarketWatch reported that the UAW’s current strike action has not caused serious damage to the economy, but if the standoff continues for several months, it could have a devastating impact. S&P Global estimates that the short-term strike will reduce US economic growth this quarter slightly, but if it is delayed by two months, it could reduce economic growth in the fourth quarter by more than 2 percent . There will be a negative impact on the economy. A huge impact on the economy, because everyone considers 2% as a long-term economic growth target.
If the strike drags on, it could drastically reduce the number of cars available for sale, disrupting supplies and causing car prices to rise. Fauci, chief economist at PNC Financial Corporation, said the UAW’s extension and the strike could be prolonged. Causing a headache for the Federal Reserve (Fed). The problem is that, in a worst-case scenario, the Fed could raise interest rates later this year to reduce aggregate demand and increase the risk of a recession next year.
Generally, the impact of the strike on economic growth will be felt in the following months when workers resume work and car factories increase production, but it is believed that talks between the two sides will have no impact on inflation.
However, this time both labor and management agreed on a wage increase. The only difference was in the extent of wage increases, which meant carmakers had to bear higher labor costs. They may have to sacrifice profits, increase prices to cover costs, or increase labor productivity, but the increase is less likely to be productive. Although the rise in US auto prices has slowed, they are still near record highs.
More importantly, the UAW wants to reinstate the cost-of-living adjustment mechanism of the 1970s and 1980s, but automakers oppose, hoping to replace it with one-time bonuses. Schwartz, a senior economist at Oxford Economics, said it remains to be seen whether the final solution will retain the cost-of-living adjustment mechanism, but including the mechanism in the talks is enough to warrant caution on the Fed’s part.