ADMINISTRATION OF WAGES AND SALARIES This responsibility may be entrusted to the personnel department.

Since the problem of wages and salary is very delicate and complicated, it is usually entrusted to a Committee composed of high-ranking executives. The major functions of such Committee are a! "pproval and#or recommendation to management on job evaluation methods and findings$ b! %eview and recommendation of basic wage and salary structure$ c! &elp in the formulation of wage policies from time to time$ d! Co-ordination and review of relative departmental rates to ensure conformity$ and e! %eview of budget estimates for wage and salary adjustments and increases. The plan is first prepared by the 'ersonnel (anager in consultation and discussions with senior members of other departments. )t is then submitted for final approval of the top executive. *nce he has given his approval, for the wage and salary structure and the rules for administration, its implementation becomes a joint effort of all heads of the departments. The actual appraisal of the performance of subordinates is carried out by the various managers, who in turn submit their recommendations to higher authority and the latter, in turn, to the personnel department. The personnel department ordinarily reviews recommendations to ensure compliance with established rules of administration. )n unusual cases of serious disagreement, the president makes the final decision.

+",- .-/-. 0 )TS 1-T-%()2"2TS The wage level is the average wage paid to all employees. This has two implications to this. The first is external how does the organi3ation compare with other organi3ations4 &ow the organi3ation wishes to position itself in the marketplace. The second implication is internal. The average wage is a reflection of the total wage bill of the organi3ation. The si3e of the wage bill is a reflection of money paid to entry level workers on up to the top executive. .abor is one of the claimants on organi3ational resources. DETERMINANTS +ages 0 salaries of jobs in any organi3ation are influenced by the following +age legislation. +age rates in similar )ndustry. )nfluence of workers union on management. *rgani3ational policy. +age legislations are of 5 types-central government 0 state government. These legislations, indicate minimum levels. )nfluence of 6nion vary widely in )ndia. )t is more powerful in public sector compared to private sector. 6nion influence also vary from industry to industry. For eg: union influence in textile 0 cotton industry is

more resulting in higher wage. &owever, )ndian Trade 6nion is highly influenced by political considerations so its influence is diminished due to disunity among them. There are 7 categories of organi3ation in )ndia 8,ood pay master9 8"verage payer9 8-xploiter9- those organi3ations who manipulate the weakness of labour. WAGES LEVEL :rom early stages itself, it remains the most important motivation factor. Steady wages provide him with physiological needs. %egular employment with relative higher payment also provide him to meet psychological need like companionship, social recognition, status, prestige 0 satisfies his individual ego. LANHAM FACTORS proposes ; factors which influence the wage level 'revailing wage rates. "bility to pay. 'roductivity. Cost of living. "ttraction 0 retention of employees. Prevailing wage rate also known as 8going wage rate9, 8prevailing marker rate9, 8comparable wage9. This is obtained through wage survey conducted among similar industries in the same area or geographical location. *rgani3ational wage level policy depends on prevailing wage rate due to following reasons a! ,overnment policies instruct uniform wage rate for similar jobs. b! Suits trade union which favour e<ual pay for e<ual work. c! Competition among firms leads to same relative wages for attraction 0 retention. d! Similar type of industries re<uires similar <ualification, skill 0 experience. &owever, some companies pay on high side of market in order to obtain goodwill 0 ensure ade<uate supply of labour. A!ilit" to #a" firms who have competitive advantage over others, those having si3eable market share 0 comfortable profit margin are likely to offer higher wages to their employees. 1uring time of economic prosperity, management will be willing to consider demands of bonus or pay rise. &owever, during recession wages are cut, denial to bonus 0 other perks. 2on- profit making organi3ation having marginal profits will pay their employees lower level wages. Thus, capacity of payment profoundly influences the level of wages. Pro$%&tivit": increase in productivity raises output 0 improve profit. This surplus income becomes a source for increased level of wages. '%*16CT)/)T= )S .)2>1-1 T* ."?*6% -::)C)-2C=. Conse<uently-8productivity-linked-wages9 has evolved. )n addition to labour, there are other factors which can improve productivity, such as@ 6se of better machines 0 plants. @ 6se of better production method. @ 6se of better production layout. @ 6se of better management techni<ues. 'roductivity can also increase by improving @ +orking environment. @ ?etter supervision. @ Aob satisfaction @ -ffective leadership style.

&ence both labour 0 management together will help improve productivity. Co t o' living: wages must be sufficient to keep both body 0 mind healthy. To keep labors spirit high 0 so that he can bring maximum effort to the job. )ncrease in )nflation will make workers life miserable. To safeguard the interest of workers following steps have been taken @ 'rovide dearness "llowances or other such allowances to take care of living )ndex by linking them together. @ 'rovide a running scale of wage wherein basic wage levels 0 annual increments are mentioned. Attra&tion ( retention o' e)#lo"ee : wage level must attract talents 0 retain them in organi3ation. &igher wages motivate people. 'erson who gets higher wage perceives himself as successful. Sense of security. Thus, it has sociological 0 psychological factors.

Wage differentials
2o one factor explains the gulf in pay that exists and persists between occupations and within each sector of the economy. Some of the relevant factors are listed below Co)#en ating $i''erential - higher pay as a reward for risk-taking, working in poor conditions and having to work unsocial hours Di''eren&e in a&&%)%late$ *%)an &a#ital - wages and salaries should help to compensate people for making an inve t)ent in education. Staying in full or part-time education. Di''erent +ill level - the gap between poorly skilled and highly skilled workers gets wider each year. *ne reason is that the demand for skilled labour Bin both manufacturing and service sectors! grows more <uickly than the demand for semi-skilled workers. This pushes up average pay levels. &ighly skilled workers are often in inelastic supply and rising demand forces up the Cgoing wage rateC in a particular industry. Di''eren&e in #ro$%&tivit" an$ reven%e &reation - workers whose efficiency is highest and ability to generate revenue for a firm should be rewarded with higher pay. :or example Top sports stars can command top wages because of their potential to generate extra revenue from ticket sales and merchandising.

+ages will tend to rise fastest when 'inal $e)an$ for the output that workers are producing is rising - i.e. people will enjoy higher pay in industries where output is rising, as revenues and profits are high.

Employer discrimination - a factor that cannot be ignored despite over twenty years of equal pay legislation in place. Trade Union protection - many workers in low paid jobs do not have trade unions acting on their behalf to protect them from the power of employers.

7DD E;D

+ages also differ region wise in every country.