Salary vs. wages

Spun off from the Gillard thread.

Background: Although I have spent my entire working life at the same manufacturing facility, the ownership of the plant has changed several times, and so too have management regimes. Both are not necessarily related! I am a skilled ‘dual’ tradesman. We moved from wages to salary in 1996, and back to wages in 2009. Salary failed because of the changing expectations of management, pure and simple.

Pre-1996, there were a core of old-thinkers who rorted overtime. You know the story; do bugger all during the day and work overtime to catch up, sometimes to the detriment of production. For some reason there was an inability or a lack of will to manage the situation over the years, but when the opening of a major expansion to the plant coincided with a new EBA, it was seen as an opportunity by the company to treat that expansion as ‘virtual Greenfield’ and create a new wages structure for the workers not only there, but also over the entire site. This new salary included rolling all the petty allowances into the hourly rate (tool allowance, leave loading etc) to create an ‘all-purpose’ rate, then adding an amount equal to the average overtime worked across the site to the total. Superannuation remained over and above the gross amount. The advantage to the company was that it created a culture of ‘hurry up and do the work’ which then decreased downtime because there was no advantage to be made by working overtime – we were already getting paid for it. It worked a treat because efficiency, production and profit increased significantly. The advantage to the worker was the feeling that he was getting paid something to do nothing, and more leisure time. The company was happy to pay what appeared to be a significantly higher base salary compared to wages because they correctly surmised that if the worker is at home, then that meant that the plant is running and does not require anyone fixing something and holding up production. Win/win. For me, I was no better or worse off. From that I guessed that I had always worked an average amount of overtime!

It was only a few years until it began to go pear shaped. A change of management regime occurred, and the new bosses couldn’t work out why the workers were getting paid so well but not working overtime to earn it. Their interpretation of the EBA meant that they couldn’t see the value-for-money argument. The next EBA in 2000 included a minimum amount of overtime that had to be worked.

The next EBA, from different managers again, saw us compelled to work even more overtime.

The next EBA saw us put onto a call-in roster, and even more compulsory overtime.

The next EBA saw us selling our soul if we wanted to remain on salary. We were threatened with returning to a wages system if we didn’t agree. We asked for an example of figures, a deal was struck, and we couldn’t be happier. Yes, when I don’t work overtime I get paid less than what I did under a salary, and the current managers have actually clamped down on overtime as well – the culture has changed.

Sorry for the ramble. I don’t like the concept of a salary for the reason that it dilutes earnings if the expectations imposed on the worker become unrealistic. I know the total value of the salary package must be considered, but so must certainty and quality of life.

Re: Salary vs wages

Julia said:

Well, here you have the divide between those who function in a union controlled environment and those who are able to negotiate their own conditions, I guess.

Unpaid overtime? Of course. Whatever it takes at times of pressure to get the job done properly. It's about believing in what you're doing and understanding that when you want some time for something personal there will be no hesitation in this being available. It's called 'give and take' and is the stuff on which productive and satisfying workplace relationships are forged. It's about mutual co-operation.

With tax free benefits and allowances, company car etc., those people who understand a mutually productive relationship will win every time.
Not to mention the greatly more pleasant working environment compared to one in which there's a constant squabble over pay and conditions.

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Julia, I function in a negotiated environment. It is definitely not one-sided! We do have the flexibility to come and go for personal or family reasons; it has nothing to do with our pay structure. We can also partake in schemes such as novated leases if desired (although they ain’t wot they used to be!) and all things considered it is a good place to work. We don’t constantly squabble over pay or conditions either, in fact I’ve never been on strike in pursuit of a pay rise! Our biggest problems lay with the company breaching the agreement every now and then, but that’s a different story. Similar with ‘tax free benefits and allowances’ that has all to do with position and not pay structure – it just so happens that the people who are in such a position, happen to be on a salary.

Re: Salary vs wages

JTLP said:

Spot on Julia. 'Unpaid overtime' allows me to work from home if I like and shoot off from work to the doctor etc. Early Fridays another incentive. Can't imagine too many hourly wagers getting this...

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Yes, kocking off early every Friday would be nice, but I prefer my fortnightly RDO. But I can start early and knock off early if I have a good enough reason, or go to the doctors etc whenever I like. Again, my beef with ‘unpaid overtime’ is that you might take on the job knowing your salary is, say, $80k per year for what you think is a 40 hr per week job, and it is only afterwards that you are expected to constantly work 60 hours per week instead for no greater reward, inbuilt flexibility or not. I'm not sure that any perceived 'perks' will always make up for it.

Re: Salary vs wages

sptrawler said:

Spot on Julia, this is what Smurph was alluding to on another thread. Just because you push up wages for a job doesn't mean you get better people.
Sometimes the ones with the least ability but the loudest voice, push for increased wages but lose conditions.
That may be because the perks weren't extended to them, as they may have been low achievers.IMO
Anyway lets just keep working towards the lowest common denominator. Funnily enough I think Bob will work this out and realise he is in a very bad place.

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It is often imposed on the workers that if any pay increase over the bare minimum offered is to occur, then something must be traded off to pay for it. Nowadays a company will hit the unions with a log-of-claims, not the other way around! It is not always about chasing the dollar; maintaining conditions is very important. Improving conditions can also have a benefit to the company, for example it was only two EBA’s ago that we fought for, and were then allowed to start taking leave for single days off, instead of a minimum amount of a week. This cut absenteeism dramatically. Win/win again. I know you meant no malice but I resent your statement that those who are not granted perks are low achievers. I still earn more than my boss!

Re: Salary vs wages

joea said:

Hi. I was a salary person. I was the Production Manager of a sugar mill. Sugar Chemist.
I was on call 24 hrs. when the mill operated.The reason for this was, that a mechanical breakdown was accepted, but mill stoppages by production were frowned on. Manager was a ex- sugar chemist.
Early in my career I figured out if I helped the operators to be really good, then they could solve the problems for themselves.
What actually happened was the more you helped them, the more they would want to learn. Well what eventuated was a mill that performed really well in efficiency( top of the state generally) and we were always in the top 3 in Qld. for sugar quality.
I received a free house, basically free power, a good superannuation scheme(defined benefit) and if I got sick I was covered by my salary.

I was also sent for a trip with a director around the world, to learn about prawn farming.
When I built my house, I currently live in, I owned it the day after the builder finished.
I could never have done any of the above on wages and overtime.

Was I short changed? Maybe!
Do I regret it? No!
Did we have a high turnover of personnel? No!

Life goes on!
joea

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Yes, a salary package structure is commensurate with that position. Again, it doesn’t mean that it fits all positions due to the exploitation factor. For some it just isn’t worth it.
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Another reason that salaries can sometimes be a bit insidious is the issue of gender disparity – under a wage structure with a set hourly rate, a male and female will always be treated equally. Obviously this does not happen in the world of salaries.

Apart from the above point, I readily acknowledge that salaries have their place – they are ideal for accountants, journalists, and as the retainer component for salesmen etc for example. But there is no long term value in it for others that enjoy some flexibility and benefits at work anyway but are prone to suffer under a boss who continually wants more and more.

Re: Salary vs wages

In my experience, supervisors and managers etc. are on salaries the company offered for those positions. The package is offered to applicants. On the other side are the workers who through prior workers union negotiation (past negotiations for rates, conditions and entitlements) are offered a wage package. Obviously the wage earners are greater in number and are represented by the unions while the supervisor and management employees, who are fewer in number, cover each other.

All supervisors I have worked under have began earlier and finished later than the wagies simply because of the organisation role they play. The mountains of paper and computer work.

Re: Salary vs wages

Wysiwyg said:

All supervisors I have worked under have began earlier and finished later than the wagies simply because of the organisation role they play. The mountains of paper and computer work.

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Supervisors earn a higher nominal salary but in my experience their actual pay rate, per hour actually worked, ends up being lower than those under them simply due to the hours worked.

Managers - work somewhere near normal hours for reasonably good money. Most management decisions aren't subject to strict time pressures (or they are self imposed if they do exist) such that there's no actual need to still be there at 10pm.

Workers - get whatever is their hourly rate for whatever hours they work. Working hours will fluctuate, but there's a thing called paid overtime which takes care of that.

Supervisors - end up on the lowest rate due to longer hours with a considerable amount of that being unpaid. There's always urgency otherwise the workers run out of work on one side whilst it piles up on the other. That leads to some long hours and constant hassles. If the manger screws up - the supervisor has to make it work somehow. If the workers screw up - the supervisor has to make it work somehow.

Rationally, the only reason to become a supervisor is if you specifically like that role and/or as a stepping stone to a management position. In itself, earning 10 - 15% more than those being supervised in return for a mountain of paperwork and problems isn't an overly good deal when you think about it from a purely work / reward perspective.

But it comes down to supply and demand - there's always someone willing to have a go at being a boss, and a supervisor is normally the lowest level that could be considered as a boss, hence there's no actual need to pay supervisors much more than those under them in order to attract suitable applicants.

My personal view is that anyone who is not actually a manager is better off on wages than on salary simply due to the reality that no matter how well it works today, a future manager may well have different ideas and that's where the trouble starts...

Re: Salary vs wages

Eager said:

It is often imposed on the workers that if any pay increase over the bare minimum offered is to occur, then something must be traded off to pay for it. Nowadays a company will hit the unions with a log-of-claims, not the other way around! It is not always about chasing the dollar; maintaining conditions is very important. Improving conditions can also have a benefit to the company, for example it was only two EBA’s ago that we fought for, and were then allowed to start taking leave for single days off, instead of a minimum amount of a week. This cut absenteeism dramatically. Win/win again. I know you meant no malice but I resent your statement that those who are not granted perks are low achievers. I still earn more than my boss!

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What I was getting at was in highly unionised workplaces, well the ones I have worked in, you tend to get the insecure lower skilled workers taking on the shop stewards job, the tradies were generaly happy with their pay and conditions. So therefore seldom got involved in the politics.
There was a time when tradesmen to apprentices was an actual ratio, I am talking in the days of the e.t.u. The T/A's were covered by the A.W.U, the T.A's asked for and recieved coverage under the e.t.u.
Well it wasn't long before the T.A's were the shoppies and then the ratio was T/A's to tradesmen at the cost of apprenticeships. Then the T/A's wage was linked to the tradesmans wage.
I am not saying it was anyones fault but just showing how dynamics can change and not necassarily for the better.
I am also a great believer that conditions should never be sold for a pay rise, they were hard fought for and you will never get them back. In the end you have nothing to sell and your pay packet still has the same purchasing power.

Re: Salary vs wages

I have worked where the salaried were better off than the wages, and vice versa. It comes down to the company's managers or owners. I have been on salary all my life and it has suited me and I've done ok out of it. Some bosses were flexible, others were jerks.

In a large organisation, it's easier for a company to manipulate/pressure salaried staff than wages, Seen it in a few. Unions are a necessary evil.

BUT... the Supervisor's role is not what it used to be, and often the role isn't worth the extra for a waged person. If you have what it takes or the desire to get higher then it's a stepping stone.

Re: Salary vs wages

johenmo said:

I have worked where the salaried were better off than the wages, and vice versa. It comes down to the company's managers or owners. I have been on salary all my life and it has suited me and I've done ok out of it. Some bosses were flexible, others were jerks.

In a large organisation, it's easier for a company to manipulate/pressure salaried staff than wages, Seen it in a few. Unions are a necessary evil.

BUT... the Supervisor's role is not what it used to be, and often the role isn't worth the extra for a waged person. If you have what it takes or the desire to get higher then it's a stepping stone.

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Yes it seems to be all of our experiences, it is a mistake to park yourself at the supervisor level. Management have no respect for the supervisor because it is not a degree position.
The wages staff feel you are part of the management team, which in reality is very far from the truth.
My recomendation would be, if you are taking a supervisory role it would have to be a transition step to management.
For example a tradesman with technical qualifications, working towards a business management degree at uni.

Throughout my working life (now retired) I was a wages man. I got to know a few people on the management team that were paid by salary. They complained often that the guys on wages were better off than them. I personally prefer the wages system, I will not give up more than my 38 hours for nothing. If they want me for extra shifts then they should pay the overtime money for my time, cheers.

Re: Salary vs wages

sptrawler said:

Yes it seems to be all of our experiences, it is a mistake to park yourself at the supervisor level. Management have no respect for the supervisor because it is not a degree position.
The wages staff feel you are part of the management team, which in reality is very far from the truth.

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That's the crux of it. Neither management nor workers view the supervisor as part of "their" side which makes for a lot of hassles.

Obviously there are advantages of both...

Wages - People who want to work the stock standard 40 hour week / 9-5 go home be happy no work to think about in the evening or on the weekend.

Salary - People who want to work the 40 hour week but probably pull 50+ and want to see themselves progress to 6 figures rather quickly so are willing to throw themselves in the deep end to get there.

I think people also have to take into consideration the opportunity/cost benefit of salary and wages. Wages may pay X for Y but when you move positions well in salary it can really move (as per Prawns anecdote)

Re: Salary vs wages

Smurf1976 said:

That's the crux of it. Neither management nor workers view the supervisor as part of "their" side which makes for a lot of hassles.

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When I was Production and then Plant Manager (12 yrs total), I made an effort to include the Supervisors as Management because they were in No Man's Land. It was appreciated - they said so. I really can't believe how many Managers underestiomate the (potential) influence the Supervisors have as Front Line Managers.

I made it through to a decent salary but I did 60 hours per week for about 10 or so years to get there. And moved to 4 different states/countries. So a price was paid.

JTLP said:

Salary - People who want to work the 40 hour week but probably pull 50+ and want to see themselves progress to 6 figures rather quickly so are willing to throw themselves in the deep end to get there.

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In my current job im on salary for the first time ever...for the record i will never earn 6 figures from this job or any job and i work 37.5 hrs per week, every week...if i have to stay back for something i just arrive later the next day.

As far as Salary vs wages goes...i could give a toss.

Hi.
Is it really about "salary vs wages", or is it about opportunity? The past vs the present!!
I think with the current employment regime we see things different now, when compared to the past.
Years ago the husband or male was the prime income earner. The female was the house sitter to look after the children. You could live on one wage and have a reasonable life.
If kids went to university, then the wife or partner helped to bring in a little extra.

In the present, both husband and wife(partner) work to make ends meet. The dog is hired out to keep guard at a warehouse, the kids deliver papers.
And the Government(both sides), says look at the low unemployment.
Yes its low, "everybody and sundry" is working to keep their "head above water" because of the high cost of living.

Some of the prices of today are just plain corrupt. Anybody here sell sun glasses?
Please inform us of what the mark up is on a $400 dollar pair in Australia. If you say 100 - 200% hah. hah.

Finally if you compare " salary versus wages" you have to look at the complete package of remuneration and opportunity on both sides. In the first instance remuneration of present day, then life 25 years down the track.(i.e. what have you achieved.)

I feel sorry for the children of the future. A big % of them are going to be sales people of crap (obsolete crap to keep up with the jones), that contributes to a throw away society. But that will be their choice won"t it.?
Its not the fact that they are not smart, they just will not afford university.

joea

So_Cynical said:

In my current job im on salary for the first time ever...for the record i will never earn 6 figures from this job or any job and i work 37.5 hrs per week, every week...if i have to stay back for something i just arrive later the next day.

As far as Salary vs wages goes...i could give a toss.

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Interesting - A salary to me is always pretty much performance based i.e at years end if you've been a good worker you'll get the nominal inflation plus whatever you deserve on top (merit) + a cash bonus (that's how we work anyway). Maybe they are generous conditions?

You might earn 6 figures one day if the world keeps going down the gurgular...

I think the more important distinction is one of attitude. I've had employees who make it a firm policy to never do any more than they are paid for. In return, they're never paid any more than they do. I've had other employees who go the extra mile, and in return they see big bonuses and pay increases. Many of them have seen their regular incomes double, and several of them triple.

The interesting thing is the perspective of those who never do any more than necessary. They see some of their colleagues outpace them, get overseas trips, perks, extra days off, extra money, promotion, etc, and usually their reaction is "it's not fair". I don't begrudge them their career decision to always do the minimum, but I find it really odd that they never understood the relationship between input & output.

I'm with Waimate as above. I've been bemused by the discussion being reduced to salary v wages. Can't see that this is what determines a good working relationship for either the employer or the employee.

Julia said:

I'm with Waimate as above. I've been bemused by the discussion being reduced to salary v wages. Can't see that this is what determines a good working relationship for either the employer or the employee.

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It didn't reduce to it - look at the title! But seriously, attitude is key. I don't recall seeing poor attitude getting rewarded in the long run. Dollar remuneration (virtually) neverrates top in job satisfaction surveys.