WAGES PLAN

BASIC ELEMENTS OF WAGES PLAN

TIME WAGES PLAN : under this plan remuneration paid to workers dose not vary with output or the quality, but depends on the time unit consumed in performing work. Time unit may be a shift/ day / week/ fortnight/ month This plan is non-incentive in the sense that the earning during a given time period do not vary with the productivity of an employee during the period.

Merits of the Time Rate Wage Plan

Simple to calculate There is no time limit for the execution of a job, workmen are not in a hurry position to finish it and this will lead in paying attention to the quality of their work Avoid conflict between the employees. Avoid rough handling of the machinery. Provide Regular and Stable income to the worker. Requires less administrative efforts to regulate

Demerits of Time Rate Wages Plan

Does not take into account the fact that men are of different abilities, and better worker will have no incentive to work harder and better. Labor charges of a particular job do not remain constant Motivation level of the workers are less in this kind of plan. Determining the level of efficiency among the workers are very difficult.

PIECE (OUTPUT) WAGES PLAN :

this is concerned with the output or some other measure of the productivity during a given period of time It is incentive basis plan. As much as employees is going to work or contribute will get more incentive. This system is adopted generally when jobs are of repetitive nature. It is particularly suitable for standardized process, and it appeals to skilled and efficient workers who can increase their earning by working to their full capacity

Merits of Piece Rate plan

It pays the workmen according to his efficiency It effects the employees motivation and direct them to contribute more to the system. Supervision charges are not very high because employees are self motivated. Not only Wages increased but the methods of production too are improved Total cost of production comes down with a large output.

Demerits of Piece Rate Plan

The method of wage is not accepted by the worker. Result in huge wastage of raw material and also leads to poor quality of the product. Excessive speed of work may result in frequent wear and tear of plant and machinery. Excess competition among the worker results in conflict among them and it will lead to form union.

Balance and Debt Methods

Combination of Time and Piece Rate system. The worker is guaranteed an hourly or a day-rate with an alternative piece rate. If the earnings of a worker calculated at the piece rate exceed the amount which he would have earned if paid on the time basis, he gets credit for the balance. And in opposite condition it will get adjusted with the excess production.

ELEMENTS OR INGREDIENTS OF A GOOD WAGES PALN

It should be easily understandable It should be capable of easy computation It should be capable of effectively motivating the employees Is should be paid on timely It should be relatively stable rather than frequently varying

Wage Differentials 1. Occupational differential 2. Inter- firm differentials 3. Inter- area or regional differential 4. Inter- industry differentials 5. Differentials based on gender.

 Wages Differentials has been classified into three categories: Differentials that can be attributed to imperfections in the employment markets, such as the limited knowledge of workers Differential which originate in social values and prejudices and which are deeper and more persistent than economic factors , like differential on the basis of gender/ age / status. Occupational wages differentials which would exist even if employment markets were perfect and social prejudices were absent.

Wages differentials

Occupational Different
Indicates thats since different occupations requires different qualifications, different wages of skill and carry different degree of responsibilities, wages are usually fixed on the basis of the differences in occupations. The basis functions of such differential are: To induce workers to undertake more demanding more agreeable or dangerous job. Encourage workers to develop skills in anticipation of higher earnings in future.

Inter-firm Differential
It reflects the relative wages level of workers in different plant in the same area and occupations. The main causes of inter-firm wage differentials are: Difference in the quality of labor employed by different firms Imperfections in the labor Differentials in the efficiency of equipment, technological advancement, financial capacity, age and size of the firm.

Inter area or Regional differentials

Same industry and same occupational group, but living in different geographical areas and paid different wages. This differential is the results of living and working conditions, such as unsatisfactory climate, isolations, substandard housing, disparities in the cost of living and the availability of manpower.

Inter- industry Differentials

These differentials arise when workers in the same occupation and the same area but in different industries are paid different wages. Inter industry differentials reflect skill differentials The industries paying higher wages have mostly been industries with a large number of skilled workers. While those paying less have been industries with a large proportion of unskilled and semi-skilled workers. Other factors: Extent of Unionization, ability to pay

Personal Wages Differentials :

These arise because of differences in the personal characteristic (Age / Gender) of worker who work in the same plant and the same occupations

Importance of Wage Differentials

Includes Manpower Growth Growth of National Income. Maximize the national product Enable full employment of the resources of the economy. Facilitate the most desirable rate of economics progress.