Workers' Liberty

GM, until recently the world's largest car maker, has been caught with its fingers in the till. The following link shows how much its pension fund is under funded.

GM Pension Fund

Worse, the company which, like the other US car maker Ford, has been making huge losses on its car manufacturing (GM has a huge financial services operation which is very profitable, and covered the losses on its car making, or at least it did have until it recently put it up for sale to cover its increasingly perilous financial position.) It was thought that given GM's huge resources on its Balance Sheet it would be able to cover its huge cash burn for another year or so, before probably needing to declare itself bankrupt under the Chapter 11 proceedings designed to allow companies to restructure - effectively to blackmail their workforces into accepting much worse conditions. However, it now appears that GM had been including the pension fund holdings on its balance sheet. The Balance Sheet is only supposed to show assets that belong to shareholders, but the pension fund does not belong to shareholders it belongs to GM's workers. The consequence is that GM's financial position is even worse that was originally beleived.

One of GM's former subsidiaries - Delphi - which is a huge components manufacturer, and on which GM still relies for parts, went into Chapter 11 a couple of weeks ago. It has told its workers that they can possibly keep their jobs if they accept a cut of two-thirds in their wages, and effectively the scrapping of their Health Insurance scheme, on which US workers rely to pay for private medical care. Almost immediately, after this GM, Chrysler and Ford negotiated huge reductions in their contributions to the health insurance schemes for their workers.

Now the UAW is threatening a strike at Delphi because it is not happy (no wonder) with the terms their members are being offered. A strike at Delphi will cripple GM, and rumours are now abounding that GM is about to devclare bankruptcy itself. The rumours are so strong that GM's share price collapsed, and the CEO had to circulate a memo to employees stating that the rumours were "overblown".

Yet again this shows why workers must insist on control of their pension funds. If GM goes bankrupt which looks very likely, and given the huge underfunding of its pension fund then GM workers will have to rely on the newly established Pension Benefit Guarantee Corporation. But already the PBGC is in trouble from other huge bankrupties and pension defaults.

The UK is proposing a similar body to protect workers in British company pension funds, but this is no substitute for workers having control of their own money - hardly an unreasonable demand.

Yesterday, the government's report into pensions recommended that workers should have to work until they are 67 before reciving their state pensions, but as one UNISON representative pointed out the low paid workers that are the most in need of the state pension have not benefitted from the increase in life expectancy the government puts forward as the reason for the pensions crisis.

It is many, many years since the state pension was introduced with a retirement age of 65 for men, and 60 for women. Since then, the increase in productivity means that a worker today produces as much as several workers back then. In a sensible economic system workers should be seeing the benefit from that by working fewer hours, and retiring earlier not being forced to work more hours, and have a longer working life. The pensions crisis is not the result of workers living longer it is the result of capitalism suffering a falling rate of profit, and particularly so as western capitalism fails to compete against the low cost production of countries like China and India. The solution to that problem is not for workers in the West to work longer, to be paid less and to get worse conditions. The solution is for workers in the west to support workers in developing countries to obtain the same level of wages and condiitons they enjoy, and to replace capitalism with socialism.

A start on the process of that replacement would be for workers to have control of their pension funds and to begin to use them to take over the firms for whom currently they generate huge profits by their labour.