Wage policy

Framework for wages

1. Submitted By : Nitish Sadotra WAGE POLICY, INTER AND INTRA INDUSTRY COMPENSATIOIN DIFFERENTIALS

2. I N T R O D U C T I O N W age policy is a complex and sensitive area of public policy. This is because the relative status of workers in the society , their morale and motivation towards productivity , are all conditioned by wages, Hence a policy dealing with this crucial problems cannot be simply economic . Equally important in this context are the concrete social facts that must be taken into account in its formulation at any given time. Wage policies are principles acting as guidelines for determining a wage structure . Wage policy refers to all systematic efforts of the government in relation to national wage and salary system .

3. CONCEPTS OF WAGES MINIMUM WAGES FAIR WAGES LIVING WAGES

4. WAGE : Wage is paid to the assembly line workers or worker at operational level. It is paid hourly/daily/weekly . MINIMUM WAGE : I t m us t prov i de no t only for th e bar e sustena n ce of l i f e bu t for the preservation of the efficiency of the workers by providing some measures of education , medical care etc. LIVING WAGE: It is not only for the bare essentials for the worker and his family but also for comfort protection against ill-insurance for old-age . FAIR WAGE: It is in between minimum wages and living wages but below the living wage .

5. INFLUENCING FACTORS OF WAGES W A GES EXTERNAL INT ERN A L Labour Market Cost of Living Labour Unions Govt. Legislations Society Economy Business Strategy Job evaluation &PA The Employee

6. W A G E P A YME N T S Y S TEM Piece Rate System The piece rate system is that system of wage payment in which the workers are paid on the basis of the units of output produced Total Wages Earned= Output x Piece Rate Time Rate System The time rate system is that system of wage payment in which the workers are paid on the basis of time spent by them in the factory Wages Earned = Time spent(Attended) x Wage rate per hour/day/week/month

7. PRINCIPLES OF WAGES AND SALARY ADMINISTRATION Pay varies as per skills required . General level of wages should be proportionate with existing labour market rates . Equal pay for equal work .

8. Wages Policy in India Payment of Wages Act, 1936 Industrial Dispute Act, 1947 Minimum Wages Act, 1948 Wage Board , 1952 Payment of Bonus Act, 1965 Equal remuneration Act, 1976

9.  The p l an n i n g c ommissi o n in F ebrua r y , 1 9 7 3 , s et u p a c ommi t t ee of wage policy when face with the dilemma as to what should be a wage po li c y w h i c h c o u ld be app li e d a s a per m a n ent f eat u r es o f o u r development strategy .  The committee appears to be restricted its scope to the problems of wage policy only in organised private sector of the economy leaving out the government sector . RECOMMENDATIONS OF WAGE POLICY

10. COMPENSATION MANAGEMENT COMPENSATION: Compensation is what employees receive in exchange for their contribution to the organization. Total compensation = Direct + Indirect Compensation Base Pay In c ent i v es Benefits

11. Compensation differential Adam Smith argued that individual consider the whole advantages and disadvantages of employments and make decisions based on alternative with great test net advantage. If job has negative characteristics i.e. Expensive training, Disagreeable working conditions, then employers must offer higher pay to compensate these negative features.

12. Inter Industry Compensation Differential

13. Type Of Industry In FMCG and financial sectors salaries are high. There are large compensation differentials across industries – software, foreign banks, consultancies and FMCG companies are top (paymenters), while at lower run are – manufacturing, consumer durables and pharmaceutical companies. In volatile industry like software, pacakges are to retain employees as manpower is scarce. In industry like engineering, there is heavy basic fixed component. In industries like financial services, treasury and banking, high variable component is paid for performance.

14. low Compensation Employers They have low-paying ability because of the constraints of their product market. Using compensation surveys, they usually pay attention to the rates of specific jobs for which there is an active outside market. The minimum feasible compensation is one that will obtain just enough employees to maintain desired employee levels for some period of time. But often organizations pay above this minimum rates, hoping to obtain employees of higher quality, lower their turnover rates, and lower their recruitment, hiring and training costs.

15. Market Rate Employers Most common compensation level strategy followed by organizations is to “pay the market”. These organizations wish to treat their employees fairly and yet not to raise their costs more than their competitors. To pay the market rate an organization collect compensation data and determine from that data exactly what the market rate is?

16. Intra Industry Compensation Differentials Experience Knowledge and skills processed Training Working conditions Department

17. THAN K Y OU