UAW Leaders Support GM Pact

General Motors (GM Quote) has agreed to contribute nearly $30 billion to finance a union-controlled health care trust fund, according to a summary of the arrangement released by the United Auto Workers.

The tentative agreement on a historic new labor contract between the automaker and the UAW received unanimous approval from the union's local leaders across the nation on Friday.

That sets up a vote on the agreement for the union's 74,000 members, expected to be held next week. While some members have expressed skepticism about the pact, which includes unprecedented concessions in labor costs for GM, it will likely be accepted.

The deal includes the formation of a UAW-controlled fund to pay health care costs for retirees, which would free GM from roughly $50 billion in obligations in return for $30 billion in cash payments to finance the fund. It also allows GM to pay lower wages to new workers and offer financial incentives to induce older workers to retire.

GM would pay an additional $5.4 billion to fund retiree health care while the UAW is setting up the health care trust. The union would assume control over the fund in 2010.

The contract includes a guarantee from GM that cars and trucks will be built at 16 U.S. plants. Hourly workers will get economic gains totaling $13,056 over the life of the four-year contract, along with a moratorium on outsourcing jobs and a shift to full-time wage rates for 3,000 temporary workers.