In organizations that implement two-tier wage systems, what is the usual treatment of existing employees?

In organizations that implement two-tier wage systems, existing employees typically continue to earn their established wages. This means that current employees retain their pay rates, which were agreed upon prior to the introduction of the new wage structure. This approach aims to maintain morale and loyalty among the existing workforce, as they have built their careers and established their livelihoods based on their pre-existing contracts and compensation.

By preserving the wages of current employees, organizations can minimize potential discontent and prevent turnover, which could be costly in terms of both recruitment and training of new employees. The introduction of a two-tier wage system is often aimed at new hires to manage operational costs, making it a strategy targeted specifically at future labor costs rather than disrupting the status of current employees who are already contributing to the organization.

This tactic allows organizations to remain competitive while balancing the financial implications of employee compensation. It also helps to sustain a more cohesive workplace environment during transitions in compensation policies.