What is Wage Drift
Definition: Wage drift is defined as the difference or change in the wage actually paid to a worker as compared to a locally negotiated wage. The increase could be due to several reasons such as overtime, bonus payment paid out by the company etc.
Description: Wage drift is the difference between the rates negotiated by a company and wages actually given to a worker by the end of a period. Due to uneven demand, the company at times asks employees to put in extra work hours to meet the demand. In that case, a company has to pay overtime to the workers on an hourly basis. Overtime would result in a higher wage given to an employee when compared with the one negotiated by a company at the beginning of the contracts. This is because the wage would now include the overtime component.
Wage drift is a common phenomenon in offshore sites of a company. For example, employees who are under a contract to work for 5 days or 40 hours in a week will be paid extra for every hour they work. If companies have to call their employees on the sixth day of the week, they fix a wage rate, which is slightly higher than what employees are receiving in their regular salary package.
If employees work on that extra day, a lump sum amount is paid in addition to their salary. At times wage drift also comprises the part of the profits made by the company. Wage drift increases when the company or the economy is on a high growth path and declines when the growth rate slows down or during the period of recession.
Description: Wage drift is the difference between the rates negotiated by a company and wages actually given to a worker by the end of a period. Due to uneven demand, the company at times asks employees to put in extra work hours to meet the demand. In that case, a company has to pay overtime to the workers on an hourly basis. Overtime would result in a higher wage given to an employee when compared with the one negotiated by a company at the beginning of the contracts. This is because the wage would now include the overtime component.
Wage drift is a common phenomenon in offshore sites of a company. For example, employees who are under a contract to work for 5 days or 40 hours in a week will be paid extra for every hour they work. If companies have to call their employees on the sixth day of the week, they fix a wage rate, which is slightly higher than what employees are receiving in their regular salary package.
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If employees work on that extra day, a lump sum amount is paid in addition to their salary. At times wage drift also comprises the part of the profits made by the company. Wage drift increases when the company or the economy is on a high growth path and declines when the growth rate slows down or during the period of recession.