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Wage policy

Framework for wages

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Wage policy

  2. 2. 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.
  4. 4. WAGE : Wage is paid to the assembly line workers or worker at operational level. It is paid hourly/daily/weekly. MINIMUM WAGE: 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. 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. 5. INFLUENCINGFACTORSOFWAGES WAGES EXTERNAL INTERNAL •LabourMarket •Cost of Living •LabourUnions •Govt. Legislations •Society •Economy •Business Strategy •Job evaluation&PA •TheEmployee
  6. 6. WAGE PAYMENT SYSTEM Piece RateSystem 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 Piece Rate Time RateSystem 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 hour/day/week/month
  7. 7. PRINCIPLES OF WAGES AND SALARY ADMINISTRATION  Pay varies as perskills required.  General level of wages should beproportionate with existing labour marketrates.  Equal pay for equalwork.
  8. 8. 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
  9. 9.  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 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. RECOMMENDATIONSOF WAGE POLICY
  10. 10. COMPENSATIONMANAGEMENT COMPENSATION: Compensation is what employees receive in exchange for their contribution to the organization. Total compensation = Direct + Indirect Compensation Base Pay Incentives Benefits
  11. 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. 12. InterIndustry Compensation Differential
  13. 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. 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. 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. 16. Intra Industry Compensation Differentials Experience Knowledge and skills processed Training Working conditions Department
  17. 17. THANK YOU