Wage and Salary Administration

Introduction:
The payment of wages and salary is an inbuilt system with
human force for their activity performed. To what extent the
payment of wages & salary is reasonable and adequate in
consonance to the nature of the work performed, is a question
mark. The reason attributed, is the existence of very large labour
force and availability of abundant work force whether it is a farm
sector of industrial sector. The supply of labour is more then the
demand and with the result there is exploitation of cheap labour
policy. Later the advent of trade unionism helped to improve the
working conditions of labour. Until the Second World War, event
the Government adopted a “LAISSEZ – FAIRE” policy in this
regard. It was as late as in 1947, that the industrial unrest become
so uncontrollable that a tripartite conference was convened of (1)
Central and State Govt. (2) Employers, and (3) Employees, which
resulted in the industrial trade resolution. It was realized that
increase in production was not possible without the fullest
cooperation between management and labour. This led to
appointment of the fair wages committee and profit sharing bonus
committee. Thus, the lot of the worker began to improve of the
living.
Wages Vs Salary:
Payment made to labour is generally referred to as wages.
Money
paid periodically to persons whose output cannot to be easily
measured, such as clerical staff as well as supervisory and
managerial staff, is referred to as salaries. Salaries are thus paid
generally on a monthly basis and at the times the elements of
incentive is introduced in the form of commission, for e.g. paid to
salesmen in addition to their salaries. However, it is in area of
labour that there are several types of methods of wage payment.

Systems of Wage Payment:

In case of worker, the wages are depend generally on the
rates of wages which may be barely rate or time rate or leased on a
piece rate, that is, dependent on worker’s output. There are also
various combinations of not only time & piece rate systems, but
also several premium plans adopted with a view to incorporate the
incentive element and motivate the worker. In addition, there are
collective wage payments also.

Time of wage Payment:

Under this system, the work is paid a certain sum for a
fixed period of time that is so much per hour or per day or month.
The main advantages under this system are the followings:

I. It is simple in calculation
II. The worker does not rush the job and spoil the quality
through a temptation of earning more

The following are however the drawbacks of the system:

I. The worker being assured of a fixed payment for the
time spend is not tempted to work harder or more productivity as
he is not rewarded for the extra effort.
II. The superior worker often tries to protect his slower
colleagues by the slacking off himself.
III. The superior worker is discouraged as, although he is
more productive, he is paid the same amount. He therefore
slackens’ off over a period time.

The system is satisfactory from the viewpoint of providing

incentive to work harder and more productivity.
The piece wage system:
 In this system, the worker is paid a fixed rate per unit
produced or job completed. The rate is normally developed on the
basis of analysis of previous performance and establishment of
average performance of a particular standard of workmanship.
The following are the advantages of The Piece Wage
System:
I. As the worker is paid more when he produces more, he
is inclined to put forth his best efforts. This results in increased
productivity, which benefits both the employer and employee.
II. The employee helps management in avoiding delays
through breakdown.
III. The superior worker is induced to work hard as at the
end of the period he finds that his pay is large than that of lazy of
worker.
IV. In his effort to produce more, the worker may disregard
the spoiling of his tools and machinery used by him for the
production.
V. It is paid merely on the basis of the number of items
produced without regard to quality. The quality of the production
is likely to decline. There is thus a tendency to sacrifice quality in
favour of quantity.
VI. This system may result in excessive fatigue as the
employee tries to work his hardest and his maximum speed to earn
as much as he can.

Premium Bonus Method:

As in the piece wage system, the employee is not
guaranteed any minimum wage in case the supply of labour is
abundant, the piece-wage rate could be so lowered as to lead to
sweating and other evils. Because of this, trade unions began to
object the piece-wage system. They pressed for a guarantee of a
fair minimum wage in connection with certain trends. As a result,
of this, a number of systems of wage payments emerged
technically known as progressive wage systems or premier bonus
system / methods.