Transcript of wages system
Slide 1SUBMITED TO:-
Fair wage
Living wage
Minimum wages
Minimum wage providing for sustenance of life plus for preservation
of the efficiency of worker.
Two types of M.W.
1- Informal minimum wages
2- Setting minimum wage
Informal minimum wages
Customs and extra-legal pressures from governments or labor unions
can produce a de facto minimum wage. So can international
public opinion, by pressuring multinational companies to
pay Third World workers wages usually found in more
industrialized countries
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Setting minimum wage
Among the indicators that might be used to establish an initial
minimum wage rate are ones that minimize the loss of jobs while
preserving international competitiveness
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Fair wage
Equal to the rate prevailing in the same trade and in the
neighborhood , or equal to the Predominant rate for similar work
throughout the country.
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Living wage
Higher than fair wage. Provides for base essential plus frugal
comforts.
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Wage policy in india
Wages policy refers to all systematic efforts of the government in
relation to national wage and salary system.
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To obtain for the worker a just share of the
fruits of economic development.
whose bargaining position is weak
To abolish malpractices and abuses in
wages and salary payments.
OR
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R Rate per unit
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For example- If a worker produces 20 units per day when the piece
rate is Rs 30 Per unit, the total wages per day will be 20*30 = Rs
600
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salary
A salary is a form of periodic payment from an employer
to an employee, which may be specified in an employment
contract. It is contrasted with piece wages, where each job, hour
or other unit is paid separately, rather than on a periodic
basis
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First paid salary
While there is no first pay stub for the first
work-for-pay exchange, the first salaried work would have required
a society advanced enough to have a barter system which
allowed for the even exchange of goods or services between
tradesmen
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Salarium
Similarly, the Latin word salarium linked employment,
salt, and soldiers, but the exact link is not very clear.
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allowances
An allowance is an amount of money given or
allotted usually at regular intervals for a specific purpose. In
the context of children, parents may provide an
allowance: pocket money to their child for their miscellaneous
personal spending. In the construction industry it may be an amount
allocated to a specific item of work as part of an overall
contract.
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Construction contracting
In construction, an allowance is an amount specified and
included in the construction contract (or specifications)
for a certain item of work (e.g., appliances, lighting, etc.) whose
details are not yet determined at the time of contracting.
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Allowances for children
Parents often give their children an allowance (British
English: pocket money) for their miscellaneous personal
spending, and also to teach them money management at an
early age.
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Allowances for adults
In Japan three quarters of men get a monthly allowance from their
wives. Since 1979 Shinsei Bank has been researching the
amount of spending money given to husbands by their wives. In 2011
it is 39,600 Yen or about $US 500
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incentives
An incentive is something that motivates an individual to
perform an action. The study of incentive structures is central to
the study of all economic activities
There are (1) Individual incentive schemes.
(2)Group incentives programe.
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Remunerative incentives
Are said to exist where an agent can expect some form of material
reward – especially money – in exchange for acting in a particular
way.
Financial incentives
moral incentives
Are said to exist where a particular choice is widely regarded as
the right thing to do, or as particularly admirable, or where
the failure to act in a certain way is condemned as indecent. A
person acting on a moral incentive can expect a sense of
self-esteem, and approval or even admiration from his community; a
person acting against a moral incentive can expect a sense of
guilt, and condemnation or even ostracism from the
community.
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Coercive incentives
Are said to exist where a person can expect that the failure to act
in a particular way will result in physical force being
used against them (or their loved ones) by others in the community
– for example, by inflicting pain in punishment, or by
imprisonment, or by confiscating or destroying their
possessions.
Natural Incentives
such as curiosity, mental or physical exercise, admiration,
fear, anger, pain, joy, or the pursuit of truth, or the control
over things in the world or people or oneself.
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Other forms
These categories do not, by any means, exhaust every possible form
of incentive that an individual person may have. In particular,
they do not encompass the many other forms of incentive –
which may be roughly grouped together under the heading
of personal incentives – which motivate
an individual person through their tastes, desires, sense
of duty, pride, personal drives to artistic creation or to achieve
remarkable feats, and so on.
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Standard time = 10 hrs
Case (i)
Case (ii)
= 10*1 = 10 Ru
12*1 = 12 Ru
Halsey plan
A wage incentive program established as the
first in the US industry.
The incentive program was created by Frederick A.
Halsey as a method for improving the
straight piece-rate system in an effort to
reduce wage rate cutting by management.
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Standard time = 10 hrs
Case (i)
Case (ii)
Case (iii)
= 9.00 Ru
Rowan plan
It is widely used in England. It was introduced by James Rowan of
David Rowan & Sons, Glass go in 1901. It is modification in the
Halsey's Plan. The premium is calculated on a percentage of wages
for the time worked and not for the time saved. This gives more
bonus to the workers.
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Standard time = 10 hrs
Case (i)
Case (ii)
Case (iii)
(iii) Sharing of profit for
over-achievement may not be liked by workers.
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The piece-rate with minimum guaranteed wage, Rowan plan and Halsey
plan are compared below. All plans guarantee an assured minimum
wage. For over-achievers, i.e., those, who perform more than
standard output, will get different wages in these plans.
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Taylor differential piece rate system
This system was devised by F.W. Taylor, the father of scientific
management and was the first systematic attempt in rationalizing
incentive.
It is based on the assumption that the degree of efficiency varies
from worker to worker and hence the workers must be paid according
to their degree of efficiency.
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To illustrate the taylor’s piece rate system, we take the
following:
Standard output = 100 units
Differentials to be applied:
120 per cent of piece-rate at or above the standard
80 per cent of piece-rate when below the standard
Case (1)
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Disadvantages
(i) It does not guarantee a minimum wage for the workers.
ii) The system is very harsh to the inefficient workers because
they gentle wages due to lower rate and lower output.
iii) It penalises a worker who just fails to attain the standard by
a narrow margin
It is clear from the above illustration that the workers with lower
efficiency less wages and workers with higher efficiency get more
wages under Taylor differential piece rate system as compared to
ordinary piece rate system.
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Merrick Differential piece rate system
This system made by Mr. Merrick, is a modification of Taylor’s
differential piece rate system. Under Taylor’s differential piece
rate system, workers by whom 100% efficiency cannot be attained or
penalized, where as under Merrick system, there is no imposition of
such punitive lower rate upon them
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Standard output = 100 units
Piece rate = 10 paise
Earnings-
As the efficiency is less than 83 per cent, only the base piece
rate applies
80*0.10= 8.00 rupees
In this, a minimum time wage is guaranteed. Working condition and
standard output are fixed on the basis of time-study.
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Standard output in 10 hrs = 100 units
Rate per hour = 1 rupees
Case (1)
Earnings:
Efficiency = 50 per cent
As the efficiency is below 67 per cent the worker is entitled to
time wages only.
10*1 = 10.00
Efficiency = 100 per cent
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The worker is entitled to time wages plus 20 per cent of time wages
as bonus.
Time = 10*1 = 10.00
Bonus = 20/100*10 = 2.00
Efficiency = 130 per cent
At the rate of 20 per cent at 100 per cent efficiency and one per
cent increase for every one per cent increase in efficiency, the
worker is eligible for 50 per cent of the time wage as bonus.
Time wages = 10*1 = 10.00
Bonus = 50/100*10 = 5.00
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Social pressure
It's also worth noting that these categories are not
necessarily exclusive; one and the same situation may, in its
different aspects, carry incentives that come under any or all of
these categories. In modern American society
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economics
The study of economics in modern societies
is mostly concerned
with remunerative incentives rather
than moral or coercive incentives – not because
the latter two are unimportant, but rather because remunerative
incentives are the main form of incentives employed in the world of
business, whereas moral and coercive incentives are more
characteristic of the sorts of decisions studied by political
science and sociology.
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recessions
Though bonuses make an integral component of free market practices
on human beings, continuing to pay them to executives by companies
benefiting from US Government financial help as planned and as
contracted is facing great criticism and opposition from
politicians and media.
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Non-monetary benefits
Compensation given in a transaction which does not
involve cash. A non-monetary reward can consist of almost
any material object such as jewelry, precious
metals or an automobile for example.
In business, a non-monetary reward can also be
a service such as improvement made on
a property or repairs done on a car.
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1936
With the growth of industries in India, problems relating to
payment of wages to persons employed in industry took an ugly turn.
The industrial units were riot making payment of wages to their
workers at regular intervals and wages were not uniform. The
industrial workers were forced to raise their heads against their
exploitation. In 1926, Government of India wrote to local
governments to ascertain the position with regard to the delays
which occurred in the payment of wages to the persons employed in
Industry. Material so collected was placed before the Royal
Commission on Labour which was appointed in 1929.
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STATEMENT OF OBJECTS AND REASONS
In 1926 the Government of India addressed local governments with a
view to ascertain the position with regard to the delays which
occurred in the payment of wages to persons employed in industry,
and the practice of imposing fines on them. The investigations
revealed the existence of abuses in both directions and the
material collected was placed before the Royal Commission on Labour
which was appointed in 1929.
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LIST OF AMENDING ACTS, ORDINANCE AND ADAPTATION ORDERS
1. The Government of India (Adaptation of Indian Laws) Order,
1937.
2. The Repealing and Amending Act, 1937 (20 of 1937).
3. The Payment of Wages (Amendment) Act, 1937 (22 of 1937).
4. The Payment of Wages (Amendment) Ordinance, 1940 (3 of
1940).
5. The Indian Independence (Adaptation of Central Acts and
Ordinances) Order,1948.
6. The Adaptation of Laws Order, 1950.
7. The Part B States (Laws) Act, 1951 (3 of 1951).
8. The Payment of Wages (Amendment) Act, 1957 (68 of 1957).
9. The Payment of Wages (Amendment) Act, 1964 (53 of 1964).
10. The Central Labour Laws (Extension to Jammu and Kashmir) Act,
1970 (51of 1970).
11. The Repealing and Amending Act, 1974 (56 of 1974).
12. The Payment of Wages (Amendment) Act, 1976 (29 of 1976).
13. The Payment of Wages (Amendment) Act, 1977 (19 of 1977).
14. The Payment of Wages (Amendment) Act, 1982 (38 of 1982).
15. The Payment of Wages (Amendment) Act, 2005 (41 of 2005).
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Minimum Wages Act 1948
The Minimum Wages Act 1948 is an Act of
Parliament concerning Indian labour law that sets
the minimum wages that must be paid to skilled and unskilled
labours. The Indian Constitution has defined a 'living
wage' that is the level of income for a worker which will ensure a
basic standard of living including good health, dignity, comfort,
education and provide for any contingency. However, to keep in mind
an industry's capacity to pay the constitution has defined a 'fair
wage'. Fair wage is that level of wage that not just maintains
a level of employment, but seeks to increase it keeping in
perspective the industry’s capacity to pay. To achieve this in its
first session during November 1948, the Central Advisory Council
appointed a Tripartite Committee of Fair Wage. This committee came
up with the concept of Minimum Wages
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1920: Mr. K.G.R. Choudhary recommended setting up boards for
determining minimum wages for each industry.
1928: International Labour Conference implemented system
to fix wages for different trades. However, the practice was not
put into legislation in India.
1943: Standing Labour Committee, a Labour Investigation Committee
was appointed on the recommendation of Indian Labour Conference
(ILC), 1943 to look into conditions of labour in terms of their
wages, housing, social conditions, and employment.
1945: The first bill on minimum wages was drafted in ILC.
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Straight piece work
Straight Piecework Plan-Incentive pay in which the employer pays
the same rate per piece, no matter how much the worker produces.
Differential Piece Rates-Incentive pay in which the piece rate is
higher when a greater amount is produced.
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standard hour plan
A standard hour plan is an incentive pay plan which establishes a
fixed unit of time for completion of a task or job. An employee
receives the wage for the standard unit of time for completion of
the task without regard to the actual time needed…………….
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For example, assume that in an automobile repair shop the standard
time for replacing a muffler is one hour. Under a standard hour
plan an employee would receive one hour's wage for replacing a
muffler, regardless of the actual time required. Such a plan
requires accurate measurement of time necessary for each job or
task
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Compensation of employees
Compensation of employees (CE) is a statistical term used
in national accounts, balance of payments statistics
and sometimes in corporate accounts as well. It refers basically to
the total gross (pre-tax) wages paid by employers to employees for
work done in an accounting period, such as a quarter or a
year
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Objectives of compensation
To be precise, Compensation is what an employee gets in return to
his contribution to the organization. The term compensation
includes pay, incentives, and benefits offered by the employers for
hiring the services of employees. Compensation planning plays an
important role in any HR department’s efforts to obtain, maintain
and retain an effective workforce. Compensation planning follows a
set of objectives.
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Wage vs. Salary
The difference between wage and salary defines more than
how much you end up making per year. We use the terms to often
describe differences in types of work, as well as what is actually
counted in the final total.
Wages are generally paid per hour. This means that you have to be
present and working in order to get paid. Most of the time,
wage jobs are not as inclusive when it comes to things like paid
vacations, or paid sick days. Wage earners often have to give up
pay for leaving early, coming in late, missing a day, or taking a
vacation.
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