GM rescinds white-collar pay cuts made in spring

General Motors, in an effort to keep employees happy as it tries to climb back to profitability, has rescinded white-collar pay cuts it made last spring as it desperately tried to conserve cash and avoid bankruptcy protection.

The struggling automaker was losing staff 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 by the cuts.

The moves come as GM tries to lure buyers back to its brands and fix its image after filing for Chapter 11 earlier this year. This weekend it will launch a new advertising campaign that offers to buy back cars and trucks if customers aren't satisfied with them.

The earlier pay cuts, ranging from 3% for many lower-level workers to 10% 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.

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

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.

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 end years of losses.

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

The pay restoration, which began Sept. 1, will be funded primarily with government dollars, at least for now. But Wilkinson said keeping good employees and selling more vehicles will help GM turn around and increase the value of the company when the time comes for the stock sale. He said the U.S. Treasury Department reviewed the pay restoration.

At least one critic of government intervention in the auto industry was not happy with the move.

"The government needs to get out of the business of owning and micromanaging banks, financial institutions and car companies. This unprecedented government control of U.S. businesses will hurt our economic recovery," said Sen. John Thune, R-S.D., who has pushed legislation calling for the government to end its ownership of GM and Chrysler within a year of passage.

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."

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