General Motors Corp.'s proposal last week to buy out more than 125,000 workers from GM and its auto parts supplier, Delphi Corp., put a spotlight on a tactic that many companies -- and the government -- use to cut costs.

"Buyouts have traditionally been a way to invite employees out the door, rather than shove them out," said Mark Iwry, senior fellow at the Brookings Institution think-tank and senior adviser to the Retirement Security Project, a non-profit group.

Deciding whether to take a buyout offer can hinge on any number of factors, including age, years of service, skills and prospects for finding another job and whether a spouse has a job with health insurance, a key issue in the United States, with its limited government medicare provision.

"Workers should think about it very carefully and go through a very clear evaluation," said Dallas Salisbury, president of the Employee Benefit Research Institute.

"I think many people end up taking buyout offers quickly because $100,000 (or some other lump-sum payment) can seem like a great deal of money, only to end up realizing -- after the fact -- it wasn't enough to justify leaving," Salisbury said.

In the GM case, workers are being offered buyouts or early retirement incentives of $35,000 US to $140,000 US, depending on length of employment and whether they want to keep health care and other benefits.

In manufacturing, workers who leave their jobs "take a beating because the skills they have are pretty limited," said Robert Topel, an economics professor at the University of Chicago.

In the auto sector, some might find work at another plant, perhaps a Toyota or Nissan factory, Topel said. "But by and large, these people will change occupations or they will retire," he said.

"They are a blunt-force instrument, versus a fine surgical instrument," said Alan Glickstein, senior consultant at Watson Wyatt Worldwide, human resources consultants.

For instance, the offer could be snatched up by the most productive and skilled workers. And an exodus of older, more experienced workers can cause brain drain.

DETROIT -- Delphi Corp. has delivered its latest proposal for cuts in wages and benefits to the United Auto Workers, which represents the majority of the auto supplier's 34,000 hourly workers, the union said.

Under the latest offer, Delphi's hourly workers, who currently are paid $27 US an hour, would see their wages cut to $22 US an hour and then fall gradually to about $16 US an hour, sources familiar with the proposal said.

Delphi, which filed for bankruptcy in October, says its U.S. labour costs make it impossible to compete. Delphi wants to cut wage and benefit rates and has set a deadline of Thursday to reach an deal with former parent General Motors Corp., the UAW and other unions.

This is cache, read story here