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The United Auto Workers will end its jobs-bank program at Chrysler LLC, effective Jan. 26, while General Motors Corp. (GM) is also in talks with the union over ceasing the practice of keeping idled workers on the payroll.

Ending the jobs-bank practice is a key part of concessions sought by the two auto makers as they race to come up with viable restructuring plans by Feb. 17 to maintain their access to low-cost government loans.

The number of workers in the jobs banks at the three largest U.S. automakers had dwindled to just 3,500 by last November, according to the UAW. But the practice rankled some in Congress and was deemed inconsistent with the federal aid package.

The UAW alerted local union officials in Chrysler plants in a letter this week, according to one who asked not to be identified. The letter was first reported by Bloomberg.

GM spokesman Tony Sapienza confirmed its own discussions with the UAW about ending the jobs bank, but declined further comment on the timing or content of the talks.

The UAW said last month that it was considering an end to the practice to help GM and Chrysler win $17.4 billion in soft federal loans.

The union declined to comment, but media reports, citing an unnamed UAW official, said former members of the jobs bank would go on state unemployment and supplemental pay from Monday.

The UAW said last November that Chrysler had around 700 workers in its job bank, with GM and Ford Motor Co. (F) having around 1,400 each.

In a statement, Chrysler said it "continues to work closely with its UAW partners to comply with the terms and conditions outlined in the government loan agreement. Discussions with the UAW will continue as we jointly work together to meet the timing deadlines established."

Ford, which also participates in the UAW jobs bank program, declined comment on whether it was in talks to end the practice. While the company hasn't sought U.S. federal aid, it has said it wants to share in the concessions secured by its rivals.

Chrysler has been trying to hammer out new cost-cutting measures from unions and other stakeholders to show the federal government that it is restructuring after receiving $4 billion in low-interest loans. It is still waiting on an additional $3 billion in support.

UAW President Ron Gettelfinger said earlier this week that he was comfortable in meeting a federal government deadline of Feb. 17 for Chrysler to present a viable restructuring plan, including employee concessions. GM faces a similar deadline to secure its own federal aid.

-By Jeff Bennett and Sharon Terlep, Dow Jones Newswires; 248-204-5532; jeff.bennett@dowjones.com, sharon.terlep@dowjones.com

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