wage drift

Wage Drift

The amount by which the wage or salary of a worker or group of workers exceeds a previously negotiated agreement. Wage drift may occur, for example, if an employee is asked to work unexpected overtime or if persons in a region are offered wages higher than the national rate during a labor shortage.

wage drift

the propensity for employees' actual earnings to rise faster than increases in their WAGE RATE. This tends to occur when there is full employment or when there are labour shortages in particular labour markets, and often results from informal bargaining between workers, their representatives (SHOP STEWARDS) and managers supplementing formal COLLECTIVE BARGAINING. It was considered to be a widespread problem in the UK in the 1960s and contributed to the decision to create a Royal Commission to investigate the state of UK INDUSTRIAL RELATIONS (See DONOVAN COMMISSION). See PRICES AND INCOMES POLICY, PAY, PAYMENT BY RESULTS.

wage drift

see EARNINGS DRIFT.
References in periodicals archive ?
Slightly higher pay agreements will allow the Riksbank some relief, but given a cooler labour market situation, wage drift above the contractual increases will probably be quite modest.
Wage drift is forecast to remain below average as company-level agreements become more widespread.
In a move likely to infuriate transport unions, Sir Roy's team also called for a review of many aspects of staffing and working practices, claiming that there had been "excessive wage drift and inefficient working practices" in the industry.
Headline inflation is set to accelerate further in line with core inflation as wage drift in the market services sectors is pushed up by strong employment growth.
In addition to the agreed wage increase at the central and industry level the employers can pay a voluntary wage drift. (3) The decline in inflation during the 1990s was accompanied by a fall in wage drift, which in recent years has stabilised at around 1%.
Most of the increase was due to wage rises implemented as part of collective agreements, but 40% had been caused by wage drift and structural factors.
With the labour market still soft and inflation low, wage drift will also be limited.
But Sir John faced a series of hostile questions from the meeting floor, including one from Alan MacDougall, a shareholder and managing director of Pensions Investment Research Consultants who said that HSBC faced an 'historic opportunity for a great British institution' to 'take a stand on US wage drift'.
The tight labour market at the onset of the recent economic downturn, along with rising inflation during 2001, led to a substantial increase in wage drift during the year.
According to the bank report, "On the basis of current wage agreements, an assumed 1 percent wage drift, and the central bank's inflation forecast, real wages during the first quarter of 2003 will be marginally higher than at the beginning of 2002, up about 0.6 percent.
Moreover, wage drift has become sizeable in some fast-growing sectors.
In these conditions, wage flexibility, and in particular wage drift, have been used to impose adjustments on relative wages.