Description
Wages are defined broadly as any economic compensation paid by the employer to his laborers under some contract for the services rendered by them Salary means remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money.
SALARY AND WAGE FIXATION
-Sharmeen Sahibole
DEFINITIONS
Salary means remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money ? Wages are defined broadly as any economic compensation paid by the employer to his laborers under some contract for the services rendered by them
?
WAGES
? ?
It is paid to workers and includes basic wages like dearness allowances etc. It does not include the following:
? ?
? ?
?
? ?
Any other allowance which the employee is entitled to The value of any house accommodation or supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grains or other articles Any travelling concession Any bonus (including incentive production and attendance bonus) Any contribution paid or any pension fund or provident fund or for the benefit of the employee under any law for the time being in force Any retrenchment compensation or any gratuity or other retirement benefit payable to the employee Any commission payable to the employee
PRINCIPLES OF WAGE DETERMINATION
The basic principle of wage and salary fixation is that it should be based on the relative contributions of the different jobs and not on the basis of who the job holders are ? If this principle is adopted, the first requirement is to identify the likely contributions of the different jobs ? Job evaluation provides the information about what is the worth of a job in terms of its contributions to the achievement of organizational effectiveness
?
OVERCOMING ANOMALIES
Job evaluation, if carried on periodically and objectively, helps in overcoming various anomalies which may develop in an organization over a period of time with regard to compensation management ? Knowles and Thompson have identified that there are the following anomalies which may develop in an organization and may be overcome by job evaluation
?
WHAT CAN BE OVERCOME BY EVALUATION?
1.
2.
3. 4.
5.
6.
Payment of high wages and salaries to persons who hold jobs and positions not requiring great skill, effort and responsibility Paying beginners less than that they are entitled to receive in terms of what is required of them Giving a raise to undeserving candidates Giving priority to seniority and not ability while deciding salaries Payment of widely varied wages and salaries for closely related jobs and positions Discrimination on the basis of race, sex, religion or political differences
SALARIES & THE ECONOMY
The major production cost, wages affect profits, business investment, competiveness, and are a cost push inflationary factor ? As the major income in the economy, wages affect standard of living, income distribution and poverty and demand pull inflation ? As the source of wage disputes is the employer treating wages as their major cost, and the employees viewing wages as their major income
?
NORMS FOR FIXATION OF WAGES
1.
2.
3.
While computing the minimum wages, the standard working class family should be considered as consisting of 4 consumption units and the earnings of women, children and adolescents should be excluded The minimum food requirements should be determined on the grounds of a net intake of 2700 calories as laid down by Akroyd for a normal adult in India Clothing needs should be established on the basis of a per-capita consumption of 16.62 m per year
NORMS FOR FIXATION OF WAGES
1.
2.
As regards housing, the minimum wages should be determined from the stand point of the rent corresponding to the minimum area specified under the Government Industrial Housing Scheme Miscellaneous expenditure on items such as fuel, lighting etc. should form 20% of the total minimum wage The resolution further prescribes that the authorities involved in the issue should justify any deviation from these norms
?
PRINCIPLES OF WAGE DETERMINATION
PROCESS
?
?
?
Preserving Real Income- This is the argument used by employees and unions viewing wages as an income Labour Productivity- A valid economic theory connects wages to labour productivity. Rewarding labour with a wage increase when technology, and/or capital investment increases, labor efficiency may not be justified The Capacity of Business to Afford Wage Increases- Emphasizes wages as a cost of production. The “capacity” argument is that followed by business owners
PRINCIPLES OF WAGE DETERMINATION
PROCESS
?
?
?
The Capacity of the Economy to Absorb Wage Increases- This argument views the macro impact of wage increases on inflation, competitiveness and other aspects of internal and external balance Supply and Demand of Labour- If the demand for certain skills are high and the supply is low, the result is a rise in price to be paid for those skills Prevailing Market Rate- Organization’s compensation policies generally tend to conform to the wage-rates payable by the industry and the community
PRINCIPLES OF WAGE DETERMINATION
PROCESS
?
?
?
Living Wage- This means that wages paid should be adequate for an employee to maintain himself and his family at reasonable level of existence Managerial Attitudes- Management’s desire to maintain or enhance the company’s prestige is a major factor in the wage policy of a number of firms. Psychological & Social FactorsPsychologically, people perceive the level of wages as a measure of success in life, security etc. Sociologically and ethically, people feel that equal work should carry equal wages
WAGE AND SALARY ADMINISTRATION ACTS
(as provided by the Government of India) 1. The Minimum Wages Act, 1988 2. The Equal Remunerations Act, 1976 3. The Companies Act, 1956 4. The Industrial Dispute Act, 1956 5. The Payment of Wages Act, 1936 etc.
GUIDELINES FOR WAGE AND SALARY
ADMINISTRATION Wage policy should be developed keeping in mind the interest of the employer and the employees ? Wage policy should be stated clearly in writing, to ensure uniform and consistent application ? It should be consistent with the overall plans of the company including compensation plans ? Wage and salary plans should be sufficiently flexible and responsive to internal and external conditions ? It should be clearly understood by all the employees of the company
?
GUIDELINES FOR WAGE AND SALARY
ADMINISTRATION All the decisions regarding the above should be checked against the standards set in advance in the wage policy ? The wage and salary plans should simplify and expedite administrative process ? Adequate database and proper organizational setup should be developed for compensation and determination and administration ? Wage policy and programme should be reviewed and revised periodically
?
OBJECTIVES
?
To establish fair and equitable remuneration To attract competent personnel To retain present employees To improve productivity
?
?
?
OBJECTIVES
?
To control costs To establish job sequences and lines of promotion To improve union-management relations To improve public image of the company
?
?
?
THANK YOU
doc_275977771.ppt
Wages are defined broadly as any economic compensation paid by the employer to his laborers under some contract for the services rendered by them Salary means remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money.
SALARY AND WAGE FIXATION
-Sharmeen Sahibole
DEFINITIONS
Salary means remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money ? Wages are defined broadly as any economic compensation paid by the employer to his laborers under some contract for the services rendered by them
?
WAGES
? ?
It is paid to workers and includes basic wages like dearness allowances etc. It does not include the following:
? ?
? ?
?
? ?
Any other allowance which the employee is entitled to The value of any house accommodation or supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grains or other articles Any travelling concession Any bonus (including incentive production and attendance bonus) Any contribution paid or any pension fund or provident fund or for the benefit of the employee under any law for the time being in force Any retrenchment compensation or any gratuity or other retirement benefit payable to the employee Any commission payable to the employee
PRINCIPLES OF WAGE DETERMINATION
The basic principle of wage and salary fixation is that it should be based on the relative contributions of the different jobs and not on the basis of who the job holders are ? If this principle is adopted, the first requirement is to identify the likely contributions of the different jobs ? Job evaluation provides the information about what is the worth of a job in terms of its contributions to the achievement of organizational effectiveness
?
OVERCOMING ANOMALIES
Job evaluation, if carried on periodically and objectively, helps in overcoming various anomalies which may develop in an organization over a period of time with regard to compensation management ? Knowles and Thompson have identified that there are the following anomalies which may develop in an organization and may be overcome by job evaluation
?
WHAT CAN BE OVERCOME BY EVALUATION?
1.
2.
3. 4.
5.
6.
Payment of high wages and salaries to persons who hold jobs and positions not requiring great skill, effort and responsibility Paying beginners less than that they are entitled to receive in terms of what is required of them Giving a raise to undeserving candidates Giving priority to seniority and not ability while deciding salaries Payment of widely varied wages and salaries for closely related jobs and positions Discrimination on the basis of race, sex, religion or political differences
SALARIES & THE ECONOMY
The major production cost, wages affect profits, business investment, competiveness, and are a cost push inflationary factor ? As the major income in the economy, wages affect standard of living, income distribution and poverty and demand pull inflation ? As the source of wage disputes is the employer treating wages as their major cost, and the employees viewing wages as their major income
?
NORMS FOR FIXATION OF WAGES
1.
2.
3.
While computing the minimum wages, the standard working class family should be considered as consisting of 4 consumption units and the earnings of women, children and adolescents should be excluded The minimum food requirements should be determined on the grounds of a net intake of 2700 calories as laid down by Akroyd for a normal adult in India Clothing needs should be established on the basis of a per-capita consumption of 16.62 m per year
NORMS FOR FIXATION OF WAGES
1.
2.
As regards housing, the minimum wages should be determined from the stand point of the rent corresponding to the minimum area specified under the Government Industrial Housing Scheme Miscellaneous expenditure on items such as fuel, lighting etc. should form 20% of the total minimum wage The resolution further prescribes that the authorities involved in the issue should justify any deviation from these norms
?
PRINCIPLES OF WAGE DETERMINATION
PROCESS
?
?
?
Preserving Real Income- This is the argument used by employees and unions viewing wages as an income Labour Productivity- A valid economic theory connects wages to labour productivity. Rewarding labour with a wage increase when technology, and/or capital investment increases, labor efficiency may not be justified The Capacity of Business to Afford Wage Increases- Emphasizes wages as a cost of production. The “capacity” argument is that followed by business owners
PRINCIPLES OF WAGE DETERMINATION
PROCESS
?
?
?
The Capacity of the Economy to Absorb Wage Increases- This argument views the macro impact of wage increases on inflation, competitiveness and other aspects of internal and external balance Supply and Demand of Labour- If the demand for certain skills are high and the supply is low, the result is a rise in price to be paid for those skills Prevailing Market Rate- Organization’s compensation policies generally tend to conform to the wage-rates payable by the industry and the community
PRINCIPLES OF WAGE DETERMINATION
PROCESS
?
?
?
Living Wage- This means that wages paid should be adequate for an employee to maintain himself and his family at reasonable level of existence Managerial Attitudes- Management’s desire to maintain or enhance the company’s prestige is a major factor in the wage policy of a number of firms. Psychological & Social FactorsPsychologically, people perceive the level of wages as a measure of success in life, security etc. Sociologically and ethically, people feel that equal work should carry equal wages
WAGE AND SALARY ADMINISTRATION ACTS
(as provided by the Government of India) 1. The Minimum Wages Act, 1988 2. The Equal Remunerations Act, 1976 3. The Companies Act, 1956 4. The Industrial Dispute Act, 1956 5. The Payment of Wages Act, 1936 etc.
GUIDELINES FOR WAGE AND SALARY
ADMINISTRATION Wage policy should be developed keeping in mind the interest of the employer and the employees ? Wage policy should be stated clearly in writing, to ensure uniform and consistent application ? It should be consistent with the overall plans of the company including compensation plans ? Wage and salary plans should be sufficiently flexible and responsive to internal and external conditions ? It should be clearly understood by all the employees of the company
?
GUIDELINES FOR WAGE AND SALARY
ADMINISTRATION All the decisions regarding the above should be checked against the standards set in advance in the wage policy ? The wage and salary plans should simplify and expedite administrative process ? Adequate database and proper organizational setup should be developed for compensation and determination and administration ? Wage policy and programme should be reviewed and revised periodically
?
OBJECTIVES
?
To establish fair and equitable remuneration To attract competent personnel To retain present employees To improve productivity
?
?
?
OBJECTIVES
?
To control costs To establish job sequences and lines of promotion To improve union-management relations To improve public image of the company
?
?
?
THANK YOU
doc_275977771.ppt