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Variable pay and collective bargaining in British retail banking

[Jim Arrowsmith] and Paul Marginson
British Journal of Industrial Relations 49, 1, 54-79

Abstract

The growth of variable pay schemes (VPS) appears to threaten collective approaches to pay determination, which are based on standardization and centralization. This article utilizes case study research to analyse the still little-known relationship between collective bargaining and VPS. It focuses on the retail banking sector, where trade union representation and collective bargaining remain relatively robust. The research identifies an emergent process whereby the growth of bonus schemes has both supplanted collective profit-share and permitted greater standardization of merit-pay awards. Unions have therefore achieved some success in terms of limiting variation in base pay, at the same time as the overall purchase of collective bargaining on employee earnings has diminished. The factors contributing to this development are explained.