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Submitted By : Nitish
WAGE POLICY, INTER AND
I N T R O D U C T I O N
Wage 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.
CONCEPTS OF WAGES
Wage is paid to the assembly line workers or worker at operational
level. It is paid hourly/daily/weekly.
It must provide not only for the bare sustenance of life but for the
preservation of the efficiency of the workers by providing some measures of
education , medical care etc.
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 .
It is in between minimum wages and living wages but below the living wage.
•Cost of Living
WAGE PAYMENT SYSTEM
The piece rate system is that system
of wage payment in which the
workers are paid on the basis of the
units of outputproduced
Total Wages Earned= Outputx
The time rate system is that system of
wagepayment in which theworkersare
paid on the basisof time spent bythem
in the factory
Wages Earned = Time
spent(Attended) x Wagerateper
PRINCIPLES OF WAGES AND
Pay varies as perskills required.
General level of wages should beproportionate
with existing labour marketrates.
Equal pay for equalwork.
Wages Policy inIndia
• 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
The planning commission in February, 1973, set up a
committee of wage policy when face with the dilemma
as to what should be a wage policy which could be
applied as a permanent features of our development
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
Compensation is what employees receive in exchange for
their contribution to the organization.
Total compensation =
Direct + Indirect Compensation
Base Pay Incentives Benefits
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.
InterIndustry Compensation Differential
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
In industries like financial services, treasury and banking, high
variable component is paid for performance.
low Compensation Employers
They have low-paying ability because of the constraints of their
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
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?
Intra Industry Compensation Differentials
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