UPDATE:GM Confirms 'Jobs Bank' To End Monday; Affects 1,600 Workers

General Motors Corp. (GM) will suspend its "jobs bank" program Monday, becoming the second of the Big Three U.S. auto makers to announce such a move this week.

About 1,600 workers will now be classified as laid off and must apply for state and federal unemployment benefits. Workers will receive some GM-subsidized payments along with their unemployment benefits which means they will continue to earn about 72% of their pay.

The move will allow cash-strapped GM to use state unemployment benefits to help cover some of the costs of paying the workers.

"We continue to restructure for long-term viability," GM spokesman Tony Sapienza said.

Part of that restructuring includes talks with the United Auto Workers about continued "sub pay" contributions and other issues, Sapienza said. Chrysler LLC ended its jobs bank program earlier this week and moved about 1,000 union workers to lay off-status.

GM, like Chrysler, needed federal loans to stave off collapse at the end of last year; ending the jobs bank was a condition of the government loans. GM and Chrysler must also submit a plan by March 31 showing how they will make more cost cuts and improve their competitiveness if they hope to win more federal money. A status hearing is set for Feb. 17.

The U.S. auto makers are required under UAW contracts to "bank" employees when there are production cutbacks. Those workers usually receive 85% or more of their pay - through benefits and sub pay - even though they don't do any work.

Ford Motor Co. (F), which didn't take any federal money, is also seeking similar concessions with the UAW. Ford has about 1,400 workers in the bank as of November.

Separately, the U.S. Treasury Department said GM and Chrysler must submit monthly milestones and actions to be taken on a monthly basis through 2010 to the agency by Feb. 17. The requirement is part of the $17.4 billion loan package the two auto makers received from the federal government last month.

The information was disclosed in new loan documents released by the U.S. Treasury Department. The department is requiring the two auto makers submit detailed restructuring plans on or before Feb. 17. Those plans need to include details on how labor costs and bondholder agreements will be modified.

Shares of Ford closed up 3% to $2.03 Wednesday but are down to $2 in recent late trading. GM shares closed up 2.1% to $3.42 but are down to $3.40.

-By Jeff Bennett, Dow Jones Newswires; 248-204-5542; [e-mail]

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