Wage Drift

It is the difference between negotiated and actual wage increases over time. It occurs when employees receive pay raises that exceed the agreed-upon wage increases outlined in their employment contracts or collective bargaining agreements. In other words, wage drift happens when workers' wages increase beyond what was initially agreed upon. This phenomenon can occur due to various factors, such as changes in market conditions, increased productivity, individual performance, or labor shortages. External factors like inflation or changes in the cost of living can also influence wage drift. Wage drift can have both positive and negative implications. On the one hand, it can be a positive sign indicating improved economic conditions or increased productivity. It can also serve as a reward for exceptional performance or skills. On the other hand, excessive wage drift can lead to higher labor costs for employers and strain labor relations if not managed effectively. Employers typically monitor wage drift to ensure it remains within acceptable limits and meets their budgetary constraints. Collective bargaining agreements often include provisions to address wage drift.