Variable payment schemes (VPS) are more widespread in banking and insurance than in other sectors, such as manufacturing. Irrespective of the sector concerned, however, profit-sharing, bonus and appraisal schemes do not, usually, refer to multi-employer agreements that govern other aspects of the remuneration system. Opening clauses, however, allow for the derogation of collective standards and/or the ability to make the level of bonuses contingent upon the firm’s performance. Whilst employers’ associations have, in general, called for the further extension of VPS within the framework of multi-employer collective agreements, unions are rather reluctant to replace regular wages, in part, by VPS.
Wage flexibility and collective bargaining
German Economic Institute (IW)
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