Wage and

Salary
Concept
Karthik.Ghanta
MBA 1st Sem
Roll No. 30
Wage
A wage is a specified amount of money paid to
an employee measured by the amount of time
they work. Employees who receive a wage are
often called "non-exempt.
Salary
A salary is an amount paid for a particular job,
regardless of hours worked .Salary is any type of
regular payments from an employer to an employee.
Employees who receive a wage are often called
exempt.
Purpose of Wage & Salary
•Attracting talented resources

•Retaining and motivating employees

•Financial Management

•Legal Requirements
 Objective of the Wage and
Salary concept
Primary objective

.To establish a structure for equitable compensation of

employees, depending on their jobs and level of
performance in their jobs

.Establishing pay ranges involves two basic phases:

Determining relative worth of different jobs to the
organization Pricing the different jobs
 Wage and Salary Surveys
• Wage and salary survey
– Survey of selected organizations within a geographical
area or industry designed to provide a comparison of
reliable information on policies, practices, and methods
of payment.
Advantages
Provides knowledge of market and ensure external
equity
Corrects employee misconceptions about certain jobs
Has a positive impact on employee motivation
Wage or salary survey information can be obtained in two
basic ways:

Conducting your own survey

Purchasing or accessing a wage/salary survey undertaken
by another party
 Wage and Salary Surveys
Conducting a Wage/Salary Survey
Personal Telephone
Interview Inteview

Mailed
Questionnaires Internet
Conducting a Wage/Salary Survey

• Personal interview
– Most reliable and most expensive method

• Mailed questionnaires
– Probably used most frequently
– Used only to survey jobs having uniform meaning all
over industry
– Can be answered by someone not fully familiar with
wage structure
• Telephone method
– Quick but yields incomplete information
– May be used to clarify responses to mailed
questionnaires

• Internet
– Inexpensive and quick
– All companies are not reachable on Internet
 Difference between Wage and Salary
• Wage is Defined as Hourly
payment
• Wager is related to those who
do the physical work
• wage related to lower class
people with in the
organization.
• Wages includes basic + da
• Salary looks like `45,000 per
year
• wages is direct expense and is
included in trading account
• Salary is defined as Monthly
payment
• salary is related is those who
do the mental work
• salary related to higher class
post
• Salary will includes monetary
benfits
• Wage looks like `16.50 per hour
• salary is indirect expense and is
included in profit and loss
account.
Concepts of Different Wages
MINIMUM WAGES

FAIR WAGES

LIVINIG WAGES
MINIMUM WAGE
•It is amount of remuneration, which is just sufficient to
enable an average worker to fulfill all his obligations.
•It is applicable to workers across the country and is governed
by the Minimum Wages Act 1948
•The law states that an employer who cannot pay the
minimum wage has no right to engage labour and no
justification to run a firm
•The current minimum wage in India is Rs. 66 per day to all
the workers in scheduled employment
•It is revised every 5 yrs
FAIR WAGES
•Workers performing work of equal skills, difficulty or
unpleasantness should receive equal or fair wages
•The basis of fair wage is the minimum wage, within the
capacity of the organization to pay
•Fair wage should be related to the productivity of the
labour
•It should match the prevailing rates of wages in the
same or neighboring localities
•It should reflect the level of national income and its
distribution
LIVING WAGES
•Living wages should enable the male earner to provide
for himself and his family, not only thebare essentials of
food, clothing and shelter, butalso a measure of frugal
comfort including :

▫Education for the children

▫Protection against ill-health
▫Requirements of essential social needs
▫A Measure of insurance against the more important
misfortunes including old age
 FACTORS INFLUENCING
WAGE/SALARY STRUCTURE
• Organizations Ability • Trade Unions
to pay • bargaining power
• Supply and demand of • Job requirements
labor • Managerial attitudes
• Prevailing market rate • Psychological &
• Cost of living Sociological factors
• Living wage • Levels of skills
• Productivity
 U
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