pay differential

pay differential

the difference between the WAGE RATES of different groups of workers. Pay differentials arise for a number of reasons:
  1. differences in skills, training and responsibilities between occupations (for example, doctors are paid more than nurses, managers more than factory operatives);
  2. differences in growth rates and PRODUCTIVITY levels between firms and industries, with high-growth, high-productivity firms and industries paying more;
  3. differences in regional employment levels reflecting differences in the supply and demand for labour in particular localities, with pay in prosperous areas generally being higher than pay in depressed areas.

Pay differentials serve to encourage LABOUR MOBILITY between occupations, industries and regions, facilitating the movement of workers into sectors of the economy where they can be more efficiently employed.

Maintenance of differentials is believed to foster poor INDUSTRIAL RELATIONS and encourage inflationary wage spirals; as one group wins a pay increase so another seeks a similar one to maintain the differential. See COLLECTIVE BARGAINING, COMPARABILITY, INFLATION.

References in periodicals archive ?
Falling pension membership in the private sector and growing value of public service pensions led to a significant increase in the estimated public sector pay differential from 1997 to 2009, even though headline pay grew faster in the private sector.
The appropriations for civilian personnel include the following: Salary differential, step increment due to length of service, 13th-month pay differential, PhilHealth differential, employees compensation insurance premiums differential, and retirement and life insurance premiums differential.
Another exception is if an employer has a "bona fide" reason other than gender for disparate pay, such as education, training or experience, and if the pay differential is out of "business necessity.
A proposal to increase the pay of 215 non-union Lane County employees, most of them managers and supervisors, has a self-reinforcing logic: A pay differential between unionized workers and their bosses must be maintained, salaries in Lane County government have fallen behind those in comparable counties, and recruitment is becoming a problem.
The country's largest aged-care provider, BUPA, wants to retain a pay differential above the new minimum wage of $14.
But the decline in the pay differential between skilled and unskilled workers -- what economists call the "skill premium" -- has also played an important role.
Currently none of the higher education institutions in Wales have committed to pay their staff a living wage despite a recent report demonstrating that the pay differential between the highest and lowest paid members of the workforce is the biggest in the public sector at a ratio of 1:19.
In higher cost of living countries, we would see the pay differential being narrower," he added.
A number of important factors have been ignored in the Treasury's analysis, and once these are factored in, there is no clear evidence that a persistent pay differential exists across the public sector.
Differential Wage Payment Credit for Employers--Eligible small business employers that pay differential wages can claim a credit equal to 20% of up to $20,000 of differential pay made to an employee during the tax year.
Factory on strike over pay differential PICKETS were out at the APV Group factory in Billingham where men were on strike over a pounds 18 per week pay gap between them and a sister plant in the south.
The Affordable Care Act includes some provisions to address these issues, including bonuses to primary care physicians to help deal with the pay differential with specialists, loan repayment programs, and a provision to shift unused residency slots to primary care.