The United Auto Workers (UAW) and the Fiat Chrysler Automobiles have announced that they have reached a tentative agreement on a labor pact, according to a report from ABC News.
The agreement covers about 40,000 workers nationwide.
The UAW was seeking for an hourly pay raise for the workers who have been employed by Fiat Chrysler for a long time, according to ABC News.
These workers haven't been given any pay raises for a decade already.
The union was also looking to narrow the wage gap that new hires are receiving from Fiat Chryslers, according to ABC News.
New hires are getting half of the $29 per hour pay that longtime workers are getting.
ABC News adds that Dennis Williams, president of UAW, said in a press conference that the agreements have met the union's goals.
He also added that the agreement will also keep Fiat Chrysler competitive with other automakers.
Williams added that the union had three goals for the new contract, give entry-level workers a path to higher pay, reward members for sacrifices they made while Fiat Chrysler struggled financially, and deal with the escalating health care costs, according to ABC News.
"We believe that we have met those goals, but ultimately our membership will make the final decision," he said.
The Financial Express reported that winning a pay hike agreement is significant in helping UAW revive its struggling effort in organizing non-union auto plants in the southern U.S.
The win can also possibly embolden workers in other industries.
Harley Shaiken, a labor expert at the University of California-Berkeley, told The Financial Express that there's more at stake in this labor agreement.
"The stakes go well beyond Detroit and the automotive industry," he said.
A research from the Center for Automotive Research states that UAW workers at Fiat Chrysler, Ford, and General Motors are earning more in wages and benefits, The Financial Express added.
They earn more compared to plants operated by Volkswagen AG, Nissan Motor Co Ltd., and BMW AG.
ABC News also reported that the UAW had picked Fiat Chrysler as the lead company in the talks this year, making it the focus of the bargaining and a potential strike if negotiations fall through.
Labor contracts between the U.S. hourly workers and Fiat Chrysler, Ford, and General Motors all expired on Monday night.
ABC News also mentioned that the agreement with Fiat Chrysler can serve as the template for UAW to use when it negotiates with Ford and GM for the labor contracts.
Williams though said that he would treat the two companies differently because they are more prosperous.
