GM Rescinds White-Collar Pay Cuts

General Motors Co. has rescinded white-collar pay cuts it made last spring as it desperately tried to conserve cash and avoid filing for bankruptcy protection.

The cuts, ranging from 3 percent for many lower-level workers to 10 percent for executives, saved the company about $50 million but eventually it spent 40 days under bankruptcy court protection, emerging on July 10. The cuts affected workers in the U.S. and Canada as well as some overseas countries.

GM was losing employees to other companies because its pay scales were no longer competitive with other automakers and manufacturing companies, spokesman Tom Wilkinson said Friday. He did not know how many had left or exactly how many workers were affected.

The company has about 25,000 U.S. salaried workers mainly in the Detroit area. Some employees at the bottom of the pay grades did not see salary cuts.

The U.S. Treasury Department, Wilkinson said, reviewed the pay restoration. Workers were notified Friday morning in an e-mail from Mary Barra, vice president of human resources.

GM, hit by the worst auto sales slump in more than a quarter century, nearly ran out of money late last year and was forced to seek government aid. After the short stay in bankruptcy protection, GM emerged with fewer factories and dealers, far less debt and more competitive union contracts and is now trying to return to profitability.

Now the U.S. government, which has given GM $50 billion in aid so far, owns 60.8 percent of the company. Much of the money is to be repaid when GM makes a public stock offering sometime next year.

The pay cuts saved the company millions of dollars, but salaries were restored starting Sept. 1 because GM needs to retain workers and keep them happy, Wilkinson said.

"We're into a period where employee morale is really important as we're starting to launch products and rebuild the business," Wilkinson said.

During GM's struggles, white-collar workers have seen the company cut incentive bonuses, its 401(k) match, and health benefits.

Rescinding the pay cuts does not affect the company's 25 top-paid executives, Wilkinson said. Because GM is receiving government aid, their compensation is controlled by the Obama administration's "pay czar."
By AP Auto Writer Tom Krisher