Question

An article in a collective agreement that stipulates a periodic increase or decrease in wages based on cost of living allowance (COLA) is referred to as a:

A) Salary adjustment clause
B) Seniority provision
C) COLA clause
D) Overtime provision

Answer 1

The correct term for the article in a collective agreement concerning automatic wage adjustments based on cost of living is a COLA clause.

Step-by-step explanation:

An article in a collective agreement that stipulates a periodic increase or decrease in wages based on the cost of living allowance (COLA) is referred to as a COLA clause. The term 'COLA clause' is used because it directly relates to the adjustments made to wages to keep pace with inflation, as evidenced by historical practices in the labor market. Such clauses serve as a form of indexing that adjusts the wages to help protect the purchasing power of union workers in response to changes in the cost of living.

For example, if inflation rises by 5%, a union member with a COLA wage contract will be helped because their wages will automatically increase to reflect the increase in the cost of living.