Wages And Salary

Wages and salary Administration

Terminologies • Wages- Aggregate earnings of a employee for his service for a day, or a week, or a month . It is the price paid for the services of labour in the process of production. Includes 2 parts- the basic wages & other allowance • Salary- compensation to an employee for service rendered on a weekly, monthly or annual basis.

Wages Vs Salary Wages 2. Quantum of service can be measured 3. Shorter Service period 4. Payment based on actual production.

Salary 2. Quantum of service cannot be measured 3. Longer service period 4. Paid uniformly generally on monthly basis

• Wage rate- Wage received by a worker for a unit of time or production excludes all other earnings. • Wage scale- Putting together all properly evaluated standard wage rates arranged in sequence according to evaluation of job & size of rate. • Nominal wages- Wage expressed in terms of money. • Real wages- Goods & services which could be purchased with the help of money wage. • Fringe benefit- compensation over & above wages often not related to output, performance or time worked

Objectives of wage & salary Administration  Control of costs  Establishment of fair & equitable remuneration  Employee motivation  Maintenance of a satisfactory public relation image.

Functions of wage & salary Administration  To approve system of job description and evaluation.  Recommend to top management the policy for administration of wage programme.  To recommend changes in wage policies and in the salary or wage level.  To review wage and salary department wise.  To check all activities of the salary administration against the company policies.

Principles of wage & salary Administration  Wage policies should be carefully developed, having in mind the interest of…. (a) the owners (b) the employees (c) the consumers (d) the community  It should be clearly expressed in writing.  It should be checked against the formulated policies

Principles (continue…)  It must inform to the employees in right way.  It should be evaluated from time to time.  Departmental performance should be checked periodically against the standards set in advance  Job descriptions and performance rating should e checked periodically to keep them up to date

Problems in wages and salary administration • High pressure from employees unions for increasing the remuneration. • High pressure from management to reduce cost.