PRINCIPLES

OF
z WAGES

CYRIL JABEZ . L
II MSW
INTRODUCTION
z

Wages is the widest sense mean a compensation paid by the employer under some

contract to his workers for the services rendered by them. Wages, therefore, include

family allowance, relief pay, financial support, and other benefits. But in the narrow sense

wages are the price paid for the services of labour in the process of production and

include only the performance wage or wage proper. They are composed of two parts. The

basic wage and other allowances. The basic wage is the remuneration by way of basic

salary and allowances, which is paid or payable to an employee in terms of his contract of

employment for the work done by him. Allowances on other hand, are paid in addition to

the basic wage to maintain the value of basic wages over a period of time.
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CHARACTERISTICS OF
WAGE AND SALARY
ADMINISTRATION
1) Wage and salaries offered must be such as to attract the skills required.
2) Prompt and correct payments of the dues of the employees must be ensured and
arrears of payment should not be accumulated.
3) A fair party must be maintained between wage differentials and skill differentials.
4) There must be a linkage, wherever feasible, between emoluments paid and
productivity.
5) Fringe benefits must be functional.
6) The promotional system should be such that even for the illiterate manual worker at
the bottom there is some opportunity through training and development for vertical
mobility.
7) As for the mechanics of wage revision within an organization to the extent feasible a
wage revision committee should always be preferred to individual judgment
however unbiased of a manager.
z

PRINCIPLES OF
WAGE AND SALARY
ADMINISTRATION
 There should be a definite plan to ensure that differences in pay for jobs are
based, upon variations in job requirements such as skill, effort, responsibility, or
job conditions and mental and physical requirements.
 The general level of wages and salaries should be reasonably in line with the
premises in the labour market. The labour market criterion is most commonly
used.
 The plan should carefully distinguish between jobs and employees. A job carries
a certain wage rate, and a person is assigned to fill it at that rate.
 Equal pay for equal work.
 An equitable practice should be adopted for the recognition of individual
differences an ability and contributions. For some units, this may take the form of
rate ranges, within grade increases, in others, it may be a wage incentive plan.
 There should be a clearly established procedure for hearing and adjusting wage
complaints. This may be integrated with the regular grievance procedure if exists
 The employees and the trade union should be informed about the procedure used to
establish wage rates. Every employee should be informed of his own position, and of
the wage and salary structure. Secrecy in wage matters should not be used as a
cover-up for haphazard and unreasonable wage programmes.
 The wage should be sufficient to ensure the worker and his family have a reasonable
standard of living Workers should receive a guaranteed minimum wage to protect
them against conditions beyond their control.
 The wage on salary structure should be flexible so that changing conditions can be
easily met.
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FACTORS TO BE
CONSIDERED WHILE
FIXING WAGES
1. Job content - Job worth.
2. Strength or Bargaining power of Trade union.
3. Demand - Supply interplay - Demand for specific category jobs.
4. Remuneration level prevailing in the Industry or identical firms or in the
locality for specific jobs.
5. The capacity of the Industry to pay.
6. Productivity, Profitability, and financial position of the firm.
7. Cost of living standard of living prevalent in the environment of the
organization.
8. Government Regulations.
9. Principle of equity.
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