From individuals to businesses, Coronavirus is not only affecting physical health but financial health as well. General Motors is reportedly taking steps to try and weather the downturn with a fresh round of furloughs and salary cuts in its white-collar workforce. According to Automotive News, the move will see most salaries drop 20 percent or more, with approximately 6,500 workers put on leave with further salary reductions. Some vehicle development programs are also being halted, at least temporarily. Health benefits will not be affected.
The affected positions are primarily in the engineering and manufacturing sectors where work cannot be done at home. This isn’t a layoff, however – the report states those 6,500 employees will be placed on leave and subject to a 25 percent pay cut until work resumes. Those still on the job around the world will see a 20 percent pay reduction, though GM pledges to make up all the lost pay in a lump-sum payment by March 15, 2021. The current reduction is slated to begin on April 1.
High-level executives aren’t immune to the cuts, either. The plan includes a 30 percent pay reduction for the company’s senior leaders, with other executives cut by 25 percent. The 20 percent pay cut also applies to GM’s board of directors, but unlike other positions, the lost wages won’t be made up.
The goal is to provide GM some instant financial relief, as revenue for the auto giant is reportedly almost zero right now. This comes after a round of layoffs at the end of 2018 that saw the company lay off 15 percent of its salaried positions amid an aggressive restructuring plan. That plan also saw the closing of several notable GM assembly plants, including the long-running Lordstown, Ohio facility where the Chevrolet Cruze used to be built.
Several automakers have suggested operations could reopen in North America starting mid-April. Thus far, GM hasn’t issued an update on its original timetable of staying closed at least through March 30. However, with Coronavirus cases rising dramatically in the U.S., an extended closure is virtually guaranteed.