Detroit, Michigan – General Motors has announced that it will reduce its salaried employment globally, from a current level of 73,000 to approximately 63,000. The reductions are expected to take place in 2009.
The company said the job cuts are the result of a severe drop in vehicle sales worldwide and the need to restructure for long-term viability. GM outlined the need for the reductions in its restructuring plan submitted to Congress on December 2, 2008; the announcement begins implementation of this aspect of the plan. The government has given GM a deadline of February 17th to show that it can be a viable company in order to receive more bailout funds.
Job cuts will vary by global region, depending on staffing levels in the region and market conditions. In the U.S., approximately 3,400 of GM’s 29,500 salaried employees will be affected. The reductions will be made using GM separation programs and policies, which include severance payments, benefit contributions and outplacement assistance. The majority of reductions are expected to take place by May 1, 2009.
GM also announced a temporary pay reduction for the majority of U.S. salaried employees, beginning May 1 and effective through the end of the year, when it will be reviewed. In the U.S., executive employees will have their base pay reduced by 10 per cent, while many other salaried employees will see reductions of three to seven per cent. Other countries are currently reviewing compensation and benefits for salaried employees.