FACTORS AFFECTING WAGES

WAGES
Rule 22 (2) of the Minimum Wages (central) Rules defines "wages" as under Wages shall mean all remuneration payable to an employed person on the fulfillment of the contract employment and includes HRA. It excludes (i) The value of rent free accommodation, supply of light, water, medical ..... (ii) Contributions paid by the employer towards the PF or any scheme of social insurance (iii) Traveling allowance / Traveling concession (iv) Gratuity The wages may consists of

(i) a basic rate of wages and special allowance called the cost of living allowance (ii) a basic rate with or without cost of living allowance plus any concession on the supply of essential commodities.

SALARY vs. WAGES

Salary was given to people with white collar jobs and wages to blue collar one The total salary is: Basic Wages + D.A + other allowances What a "Salary" looks like: $45,000 per year

What a "Wage" looks like: $16.50 per hour

Wages are paid to the direct labour, either in the form of time rate or piece rate (hourly or weekly basis) Salaries are paid to indirect labour, mostly in the form of time rate (monthly basis)

MINIMUM WAGES: FIXED BY GOVERNMENT TAKES INTO CONSIDERATION THE COST OF LIVING THIS IS THE WAGE WHICH MUST PROVIDE NOT ONLY FOR BARE SUSTENANCE OF LIFE BUT FOR THE PRESERVATION OF EFFICIENCY OF THE WORKER- GOVERNMENT COMMITTEE ON WAGES(1948) FAIR WAGES: FIXED BY EMPLOYER DETERMINED ON THE BASIS OF : PRODUCTIVITY OF LABOUR PREVAILING WAGE RATES IN SIMILAR JOBS LEVEL OF NATIONAL INCOME AND ITS DISTRIBUTION PLACE OF INDUSTRY IN THE ECONOMY THE EMPLOYERS CAPACITY TO PAY

 LIVING WAGE: HIGHEST AMONG THE THREE MUST PROVIDE BASIC AMENITIES OF LIFE AND SOCIAL NEEDS LIKE MEDICAL, EDUCATION, ETC.

COMPENSATION FACTORS
Compensation management is about a range of interconnected processes that aim through both financial and non-financial means to address what employees value in the employment relationship . The various factors affecting the compensation and Wages are:

INTERNAL FACTORS

Productivity, Growth and Contribution

Performance/ Work Related Companys Affordability & Budgets Ability to Pay Corporate Strategies Business & HRM

Organizational Values
Flexibility Responding to Changes

 Motivation Oriented Competence Based Performance Appraisal Organization Grade Structure Job Evaluation Relative size of Jobs Non Financial Benefits Employee benefits Trade Unions

EXTERNAL FACTORS:
Cost of Living & General needs of people employed Demand & Supply of Human Talent Market Standards Industry Trends State Legislations

In the Innovative employee reward system the features varies from industry to industry. But the common features are
1. Performance Appraisal System :
Performance appraisal system is not only a direct projector of performance by an individual during the year but accounts for so many other parameters

2.

Company commitment : If management commitment is not there , then innovative systems will never come into existence. Business simulations if available may be tried to work out the nearest possible results.
Minimizing the Bias factor : Bias factor is a stigma on innovative practices. You can not eliminate this but by minimizing the bias factor , one can achieve the objective of innovative system. Availability of resources : For implementation of any system one has to have resources for the same.. If resources are not available the morale which you want to improve will not be as much possible as you desire to be.

3.

4.

ESSENTIAL CHARACTERISTICS OF IDEAL WAGE SYSTEM

1. 2. 3. 4. 5. 6. 7. 8. Rational & Equitable Economical Guarantees minimum wages Provision for incentives Stable Simple Linked with Productivity Workers Share in Excess profits

9. Encourage cooperation between workers and employers

10.Initiative to be rewarded