The two-tier wage scales that have been around the US are coming back to Canada.
The two-tier system is usually implemented when the employer wants to compensate seniors and establish a merit pay wage structure without increasing the overall wage costs, or simply to reduce the overall wage costs of the company. Recently, the CAW (Canadian Auto Workers union) agreed to deals with Ford and GM of a lower hiring rate- $20 an hour instead of $24 currently- and a total of ten years to reach the top salary scale of $34 instead of six.
Two-tier wage deals were seen mostly during the recessions in the early 1980s and early 1990s as a popular resolution when the economy is down. Former CAW president Buzz Hargrove said that unequal deals have become “more the norm than the exception.”
Two-tier systems can often be a backlash to the workers. There have been many cases where the systems have eventually faded away as the economy improved. However, at a time like this with the sluggish economy, it can take awhile for the deals to unwind.
On the other hand, George Smith, labour expert at Queen’s University thinks not, stating ““I think it might be better that companies and unions and employees live to fight another day and are able to adapt to the market conditions.”
