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WAGES

Presented By:
Abhradeep Paul
Pawan Kumar
OVERVIEW:
Wages are defined by I.L.O as “the remuneration paid by the
employer for the services of the worker who is engaged b
the hour, days, week or fortnight”.
Wage differentials serve many useful purposes that include
the following:
1.To induce the employees to change jobs.
2.To channel employees from declining industries to new
industries.
3.To get employees to to learn and acquire new skills.
4.To get employees to accept more responsible position.
Organization can’t afford to ignore the impact of
various wage differentials. Effective management of
human resources essentially requires the management to
keep the wage programmes current.

1.
TYPES OF WAGES:-
 Two types of wages :
 1 . Time Wage :
 Under this method employees is paid on the
basis of time worked i . e hourly , weeklyor monthly
or any other fixed period of time irrespective of
the quantity of work done .

Ø Employee is paid at the settled rate as soon


as the time contracted for is spent ; and his
production is not taken into consideration .
Ø
Ø This pament is found in practice in those industries
and for those jobs where quality of goods produced
is of extremeimportance .
ADVANTAGES OF TIME WAGE SYSTEM

§The quality of the product can be maintained b paying particular


attention as there is no time limit for completion of a job .

§As workers in no hurry to complete the job , they will avoid over
speeding and the consequent damage to equipments , thus there is
no rough handling .

§All the members doing a particular kind of work get the same
wage under this system ; so there is no reason for jealous among
the members of the group .
§
§ It gives the workers a sense of security . The need not be
afraid of the cut in wages even when their efficiency is
temporarily impaired by an injury or sickness .
§
§This system promotes industrial peace because labor unions
favour it and recognize it in the interest of workers as it does
not create any distinction in the ranks of the workers .
DISADVATAGES OF TIME WAGE SYSTEM

vThere is frequent tendency of being slack in work as there is no


specific time limit to complete a job.
v
vThis system doesn’t distinguish between efficient and inefficient
workers and between honest and a shirker. Wages are paid to all
according to time spent on work; it decreases the morale of capable
workers.
v
vIt requires continuous and strict supervision so as to maintain
quality and quantity of work and to reduce the cost of production
thereby.
v
vEmployer find it difficult to calculate the labor cost and cost of
production because the output and the cost fluctuates considerably under
this system.
2. Piece wage :
Under this method quantum of work is the basis
for paying the wages and not the time spent on work. A
fixed rate for producing a unit of output is agreed
upon and paid.

Worker’s earning can be calculated on the


basis of this formula –
WE = NR
Where,
WE = worker’s
earning
N = no. of pieces
produced
R = rate per piece.
ADVANTAGES OF PIECE WAGE SYSTEM :

ØThe cost of production and cost per unit can easily be


calculated and estimated because labor cost per unit is
constant .
Ø
ØSupervision charges are not so heavy since no strict
supervision is called for as workers themselves are interested
in raising the production to earn higher wages .
Ø
ØThere is increased production as well as productivity due to
greater motivational effects through financial incentives .
Ø
ØThere is greater cooperation from workers in avoiding
interruptions in work . They take great care to prevent a
breakdown in machine or workshop .
DISADVANTAGES OF PIECE WAGE
SYSTEM :
ØIt lays too much emphasis on quantity of production at the cost of
quality of the product .
Ø
ØThere is frequent spoilage of tools , equipments , wastage of materials ,
over working in machines and more consumption of power as the workers
are in hurry to finish the work at a breakneck speed .
Ø
ØIt makes the worker feel insecure because he gets wages on the basis
of output .
If the worker ’ s efficiency is impaired temporarily by ill health etc . he
will lose his wages for that period .
Ø
ØLabour Unions oppose this system because the fixation of piece rate
is not done on a scientific basis . Politically too this system weakens
the labour unions as workers get no time for union activities .
Ø
ØWorkers may have to lose their wages where the production process is
interrupted by reasons beyond their control such as power failure or
non - availability of materials etc .
WAGE PAYMENT SYSTEMS :

A.Payment by Result System :


B.
III.This is designed to reward the employee for the no. of units he produces or the time
he takes to do a given amount of work.

I. Appropriate output or time rates are calculated using the work study technique or
effort rating. A base rate for all employees is normally applied, but the worker who
produces more or takes less time can earn more than the base rate.
II.
III. This additional payment may take the form of proportional piecework ( the
additional pay increases in direct proportion to extra output) or differential
piecework (beyond a given point, the additional pay increases either faster or more
slowly than the increase in output.
B. Measured Day Work :
This system is designed to level out earnings from week
to week.

ØSeveral levels may be set , using a work measurement


technique and the employees progresses through them as
he becomes more proficient.
Ø
ØSo when an employee reaches a certain output over a
period say 2 weeks, he is paid at the rate for that
level of programme.
Ø
ØThis system can overcome the problems produced by the
variations of piecework.
C. Flat Rate Systems :
These are also known as day rate, day work, time
rate or hourly rate.
Ø
ØThese provide that the employee receive an agreed
rate of payment in return for a given period of work .
Ø
ØThis rate is fixed periodically through collective
bargaining or by referring to local rates . Pa varies
only with the hours worked , not with the rate of
output .
THANK YOY

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