DETROIT — General Motors will temporarily reduce paychecks for all salaried employees globally by 20 percent to conserve cash as it weathers the coronavirus outbreak, but the automaker is promising to make up for the lost income within a year.
In addition, 6,500 salaried workers in the U.S. — mostly people in engineering and manufacturing functions who cannot work remotely — will be placed on leave and receive 75 percent of regular pay during the downtime.
“GM’s business and its balance sheet was very strong before the COVID-19 outbreak and the steps we are taking now will help ensure that we can regain our momentum as quickly as possible after this crisis is over,” the company said in a statement Thursday.
The pay deferments will start April 1 and potentially could last about six months, GM spokesman Jim Cain said.
Employees will receive lost earnings in a lump-sum payment no later than March 15, 2021, GM said.
The move will result in “significant” immediate cash savings, but GM declined to be more specific. The company has about 69,000 salaried employees, or about 42 percent of its global work force.
Executives will see deeper pay cuts on top of the unilateral 20 percent deferment, resulting in a total reduction during the crisis of 30 percent for senior leadership and 25 percent for other executives. Pay for members of GM’s board of directors will be cut 20 percent and not repaid.
Employees’ health care benefits will not be affected.
Earlier Thursday, Ford Motor Co. said top executives will be subject to 50 percent pay cuts, and Executive Chairman Bill Ford deferred his full salary for at least five months.
CEO Jim Hackett said Ford would defer merit-based salary increases, suspend overtime for salaried workers and freeze hiring for noncritical positions. He said work schedules and pay might be “temporarily reduced” for workers whose jobs cannot be done from home and that others may be offered voluntary sabbaticals.
