Â鶹ӰÊÓ

The Canadian Auto Workers union has agreed to a tentative agreement with General Motors that will freeze wages and pensions, cutting labour costs for the struggling automaker.

CAW president Ken Lewenza said the two sides came to a consensus at 5:30 a.m. Sunday, tentatively agreeing to changes to the collective bargaining agreement that the union believes will keep a "Canadian investment advantage" in place.

"The contract changes we have negotiated are a significant sacrifice on the part of CAW members, both active and retired," he said at a noon-hour news conference in Toronto.

"They will cause real hardship for our members and their families."

Details of the tentative deal include:

• Base wages and pension levels have been frozen.
• The existing CAW contract will now expire in 2012 instead of 2011.
• Autoworkers will pay a monthly health premium, among other concessions, should the agreement be ratified.

However, there will be no cuts to current pension levels and wages.

"We refuse to impose more pain on our laid-off members, who are already paying a huge price," said Lewenza.

All of the tentatively-agreed-to changes are contingent on GM securing the more than $30 billion in government loans that are vital to its future, Lewenza said.

"The agreement is contingent on the companies receiving government and financial assistance and recommitting to a proportionate Canadian manufacturing presence, including specific product commitments in GM's respective plants," he said.

Workers will be hit hard by changes, says union

CAW economist Jim Stanford told CTV's Question Period that the changes "are going to mean real sacrifice for our members and for our retirees, so it's not a happy occasion on our side."

"On the other hand, for General Motors it will mean a little bit of a reduction in their labour costs, a significant reduction in their legacy costs...and hopefully that will allow the federal and provincial governments now to finalize their deals with GM to keep the company operating here in Canada."

Finance Minister Jim Flaherty told Question Period the tentative agreement is "a good step forward."

"This is very important. This needs to be resolved, this month, during the month of March. It's a step in the right direction," he said.

"There's more to be done certainly in terms of reasonable assumptions about car sales, about the future of these companies, the Detroit Three, but this is a good step forward."

The deal is subject to ratification by 10,000 CAW members who work for GM, and a vote is scheduled to take place on either Tuesday or Wednesday, the union said.

GM fights against 'substantial doubt'

GM has sought more than $30 billion in loans from the U.S., Canadian and Ontario governments.

The company has already submitted a restructuring plan that would require it to lay off 47,000 workers globally. That includes about 4,000 employees in Canada, where the average manufacturing wage is $34 an hour, according to The Canadian Press.

Last week, the company admitted that auditors had expressed "substantial doubt" about the company's ability to keep operating and it fell to third-place in the Canadian market in its February sales.

On Thursday, Lewenza said it was "too devastating" to fathom the possibility of GM filing for bankruptcy. He said the CAW would go along with negotiations in hopes of having a new contract ratified by March 15.

Despite the doom and gloom surrounding the industry, Stanford said the union was keeping an eye to the future by agreeing to tough concessions.

"We know that more job cuts are on the way," he said Sunday.

"What we're doing here is desperately trying to preserve the remaining footprint of General Motors that will manufacture a range of different cars in Oshawa, engines and transmissions in St. Catharines, and hope that as the economy turns around...then we'll have a chance to catch some of that next wave of the industry."

Stanford said the union will now move its attention to Chrysler and Ford, with hopes of inking a similar deal through pattern bargaining.

But Charlotte Yates, a labour expert at Hamilton's McMaster University, said the deal will do little to help GM's long-term fate.

"This alone is not going to save GM," she told Â鶹ӰÊÓnet. "They have to wait and see what the deal is in the U.S."

And as GM's stocks plummet and the company's survival prospects deteriorate, Yates said that Canadians may not be willing to offer a big bailout package.

"Increasingly, I think Canadians are getting nervous," she said, adding that the prospect of GM going bankrupt even with a bailout "sends shivers down people's spines."

Still, she said the CAW's deal is a good step forward if GM hopes to ride out the recession and emerge stronger.