U.S. automaker General Motors announced this week it was instituting a new business cost reduction initiative aimed at improving profitability.
The New York Times reports that GM will no longer offer pensions for its salaried workers. The move, according to analysts, is intended to reduce overall expenditures and will enable the company to boost profitability, a stated goal of the company's management. GM famously received a government bailout only a few years ago, and the carmaker is on a quest to continually improve earnings.
GM said Wednesday its salaried employees would stop receiving pension benefits later this year. The company affirmed, on the other hand, its 26,000 U.S. workers would receive bonuses - even though their salaries will remain the same. What's more, GM said its U.S. workers would also receive one extra week of paid vacation as a conciliatory gesture.
Even though they will not be allotted future pension benefits, the company's employees who have already received them will not lose those they have accrued, according to company officials.
GM's cost reduction initiatives helped boost the company's profit margin in 2011, with the automaker reporting net profits of $8 billion for its full fiscal year.