Wage concessions key to auto sector subsidies: Study

Economists find domestic car bailout cost effective, but expect more demands in future
By Danielle Harder
|Canadian Labour Reporter|Last Updated: 04/02/2012

A new report suggests future investment subsidies and bailouts in the auto industry should come with wage concessions from workers.

While the 2009 bailout of GM Canada and Chrysler Canada was cost effective, ongoing subsidies would effectively support inflated wages for auto workers, the study by the Institute for Research on Public Policy found.

“In all cases, it’s better to provide subsidies than lose investment. But we can do better,” says co-author Leslie Shiell, an economics professor at the University of Ottawa. “The question is: Can we do it for less?”