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 ?
After hearing both parties who submitted position papers, the Labor Arbiter assigned to the case rendered a decision in favor of Annie ordering AMCI to pay her salary differential, emergency living allowance, 13th month pay differential, and separation pay for every year of service all totaling to P55,161.42.
There are limited exceptions including if the pay differential is due to a seniority or merit-based system or where the employer can demonstrate each of the following:
According to Provincial Bus Operators Association (PBOA) Executive Director Alex Yague, drivers should be paid more than conductors because of their greater responsibilities, noting that the pay differential was about 2 to 3 percent.
The selection is complicated by the fact that Santiago was one of the few high-ranking Hispanics in the mayor's cabinet and that a wave of retirements -- tied in part to a pay differential -- soon may leave the Chicago Fire Department without a single deputy commissioner.
We estimate the changing value of workplace pensions in the UK and incorporate their value into an estimate of the public sector pay differential. 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.
Still, the legislation has a number of exceptions, allowing for pay disparity if earnings are measured by the "quantity and quality of production." 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."
The Act says that employees must be paid the same for "substantially similar" work; that any non-sex related factors used to justify the pay differential must be reasonably applied and account entirely for the difference; and it prohibits retaliation or discrimination against employees for disclosing, discussing, or inquiring about their own and co-workers' wages.
* The country's largest aged-care provider, BUPA, wants to retain a pay differential above the new minimum wage of $14.75 an hour, which came into effect on April 1.
But the decline in the pay differential between skilled and unskilled workers -- what economists call the "skill premium" -- has also played an important role.
Many have attributed the pay differential to the fact that women don't negotiate as aggressively over their compensation as men do.
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.