First Ford, now GM brings back merit-based raises

Ford and General Motors froze merit pay raises for white collar workers for one year, and as we reported last week, Ford is set to reinstate them next year. GM has just announced similar plans to bring back the merit-based raise for its salaried employees, as well. The raises will be paid starting next year, contingent on continued overall (global) rosiness in the business, but any increases will be "based on employee performance." The General, however, has also set up a merit fund from which to dole out the money.

Merit pay seems to be an on-again-off-again thing. GM and Ford did not give out merit pay this year, but Chrysler did. Chrysler did not pay merit raises in 2006, but GM and Ford did. And Chrysler doesn't know if it will hand out merit pay next year. The raises don't affect hourly employees, whose pay is determined by mutually agreed upon UAW contracts.

[Source: Detroit News]