What is Wage drift?
Wage Drift refers to the difference between the wages or salaries that employees are actually paid and the wages that are defined in a company’s formal compensation structure or collective agreements. It typically occurs when employees earn more than what is outlined in their standard pay scales, often due to factors such as overtime, bonuses, or individual negotiations.
Key Aspects of Wage Drift:
Overtime: Employees working beyond their regular hours may earn extra pay, which can lead to wage drift.
Bonuses & Incentives: Some employees may receive bonuses or incentive pay that exceed their base salary, leading to a discrepancy between their formal wage and the actual wage.
Market Adjustments: If an employer increases salaries to stay competitive in the market, this can cause wages to drift beyond the set pay structure.
Individual Negotiations: Employees with specialized skills or higher negotiation power may secure higher wages compared to others in the same role.