Undermining or reframing collective bargaining? Variable pay in two sectors compared

Abstract

Although it is widely presumed that variable payments systems (VPS) such as individual merit and profit‐related pay are corrosive of collective bargaining, the actual relationship between the two remains little explored. Drawing on company case studies from retail banking and machinery and equipment, this article finds that collective bargaining can variously be reconfigured – as over individual merit pay in the banks; extended to cover local bonus arrangements, evident in instances in both sectors; or lose its purchase on a significant proportion of earnings – as with management‐determined profit‐related bonus in both sectors. In terms of the implications for collective bargaining, much therefore depends on the type of VPS.

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