By Bernie Woodall
DETROIT (Reuters) - U.S. union United Auto Workers' leaders on Friday approved a tentative four-year contract with Fiat Chrysler (NYSE:FCAU) Automobiles NV (MI:FCHA) (N:FCAU), sending the proposed pact to 40,000 workers for a ratification vote. The move follows Fiat Chrysler workers' rejection last week of a previous tentative contract. A new tentative agreement was reached on Wednesday night, averting a call by the UAW to have its members strike Fiat Chrysler's U.S. operations.
Several hundred of the UAW's local leaders from its branches, mainly in the U.S. Midwest, met in Detroit to take the formal step to send the contract on to a worker vote.
The new deal would reshape the way in which UAW workers at Fiat Chrysler are paid, gradually eliminating the contentious two-tier pay structure. However, it will take eight years from hiring to top pay rather than a shorter period for UAW workers prior to the 2007 creation of the two-tier structure when all three Detroit automakers were struggling financially.
The deal is richer for second-tier workers than the one rejected by a nearly 2-to-1 margin in that it raises the top pay for newer second-tier workers to about $29 from about $19 currently, and from the top pay of $25 proposed in the rejected contract.
Fiat Chrysler is financially the weakest of the Detroit Three which also includes General Motors Co (N:GM) and Ford Motor Co (N:F). Its labor costs are lower than GM's or Ford's in large part because it has a higher percentage of second-tier workers.
Arthur Schwartz, a labor consultant and former GM negotiator, said this proposal is richer and that he will be "stunned" if it is not ratified.
"If (UAW members) don't vote for this, then their expectations are too unrealistic and I don't know if they can get a contract at Chrysler," Schwartz said after the highlights of the new deal were released.
When UAW leaders sent the previous proposal to worker vote last month, Schwartz said it would have a difficult time passing.
If ratified, fist-tier workers would get their first raises in about a decade. They would get an immediate 3 percent raise from their current pay of about $28, and another 3 percent in the third year, along with lump sum bonuses of about $2,500 in years two and four.
The UAW said it agreed with the company to offer "retirement incentive packages" at some plants, without mentioning which ones.