Progressive wage grids display new trend

Cost-savings, rather than retention or skill recognition, is purpose
By Gordon Sova
|hrreporter.com|Last Updated: 05/14/2009

Graduated wage grids where employees take a period of time worked to reach the job rate are nothing new. They exist in many collective agreements and may serve different purposes. However, recent manufacturing agreements display an interesting trend.

A central purpose of lower wages for new employees is to reflect the fact that an employee with little experience will be less productive and create less value for the employer. Employees on probation commonly earn less for the first few months on the job. For employees in more skilled jobs — aircraft assemblers and mechanics, for example — the wage grid may provide for continuing increases over a number of months or even years. Scales for apprentices are a good example.

Some wage grids with long progressions reflect both the growing value of the individual, but also the amount the employer has invested in the employee and how much the employer wishes to retain the employee. Nursing grids and teaching grids with progressions over a decade fulfill these purposes. A teacher or a nurse with eight years of experience may well be a more effective teacher or nurse, but they are assigned the same tasks as a first-year teacher; a first-term apprentice is not expected to do what a journeyman does.

Beginning with the Big Three automotive agreements last year, a different purpose has been given to wage progressions: cost savings. In that case, new employees have to work three years before reaching the job rate. They earn 30 per cent less in the first year, 20 per cent in the second and 10 per cent in the third. Now, a flurry of similar provisions at companies such as Waterloo Furniture Components, Beachcomber Hot Tubs, Ivaco Rolling Mills, Tamarack Lumber, Lafarge Canada, Lakeside Steel, Servisair and Dare Foods, among others, have come to our attention. All have wage progressions of well over one year and many of three years.

While the traditional explanation of increasing productivity may still apply, it seems unlikely that it would take three years to reach an acceptable standard of output in, at best, a semi-skilled occupation. Cost containment was the reason behind the Big Three move to a longer wage progression and the same justification most likely applies in these cases as well.

A question that remains, however, is how effective a progressive wage grid can be in a period of little or no hiring. Lower wages must displace higher ones. Though, after the current economic recession is over and production does pick up, it could have a significant effect on the bottom line for several years.