When Collective Bargaining Leads to Inequality: Determinants of Two-Tier Provisions in Canadian Collective Agreements

Abstract

This study examines two-tier provisions—a form of labor segmentation in firms that is increasingly formalized in collective agreements. Drawing on a large population of Canadian collective agreements from the private sector, the authors show that the adoption of these provisions is related more to industrial relations context than to economic uncertainty. Also, depending on whether the two-tier provisions focus on compensation or on job security, their determinants operate dissimilarly. This study contributes to labor market segmentation theory by showing the circumstances under which collective bargaining can marginalize newly hired workers in the primary labor market, namely, weak union power, pressures from sectoral comparisons, employer use of concessionary tactics and, ironically, collective agreements featuring advantageous working conditions.