by Of all the factors that affect labour-capital relations, remuneration in the form and wages of bonus presumably figures most prominently. Majority of the industrial disputes are economic in nature and wages and bonus constitute the apple of discord between labour and management.
It has, therefore, been rightly put “wages operate both on the circumference and at the centre of industrial relations.” Wages, as a factor price, have the peculiarity that these have to be paid in advance of the sale of goods; the productivity measurement becomes somewhat uncertain and it gives rise to a conflict of interests between workers and employers.
Wages must be fair, an in order to ensure this, certain matters must have to be taken into consideration, minimum wage, guaranteed wage, wage differentials and forms of wage payments.
There are three concepts of wages, minimum wage, fair wage and living wage.
Minimum wage is just the wage to cover the bare necessities of life, food, clothing and shelter. It may provide a little for workers’ efficiency for their health and education. Minimum wage legislation is in force in most of the countries. Because of the weak bargaining power of workers, legislative action for minimum wage payment is necessary.
Fair wage refers to wage concept where the wage is such as to give sufficient inducement to work. It includes components such as bare necessities, insurance schemes, children’s educational expenses, recreational expenses and a certain margin for saving.
A good wage plan should have the following characteristics:
(1) Simplicity and flexibility,
(2) Incentive element,
(3) Fairness and equity,
(4) Adequacy in compensation,
(5) Facility for collective bargaining,
(6) Merit rating,
(7) Minimum wage provision,
(8) Money wage orientation,
(9) Inflation combating element,
(10) Grievance highlighting mechanism,
(11) Conformity with current rates of wages,
(12) Provision for fringe benefits,
(13) Cost control device.
A sound wage plan is essential both for the workers and the employers. Simply formulated with enough flexibility and having the element of inventiveness, a good wage system Increases productivity of labour, enhances production, brings about better relation between labour and capital.
Discontentment among workers is reduced to an appreciable extent; the efficient workers are duly promoted and adequately remunerated.
Though a scientifically planned wage system apparently appears to be an inflated amount of wage, a careful observation discloses that ultimately it pays the employers and helps development of a more congenial atmosphere where the workers are expected to give the best in them to the organisation.
There are two fundamental methods of compensating the workers: Time Wage and Piece Wage. Time Wage based on time spent on work is a widely used method very simply to operate. The amount of earnings is guaranteed; quality of work is likely to be improved, since a worker is not interested in the quantum of production.
He is rather interested in spending the time and, if kept under proper supervision, this may help improvement of quality of the product produced slowly but carefully since he is to work under supervision. But quantity suffers; the increase in production cannot be expected to the desirable extent.
Piece wage method is based on quantum of production. “Produce more, you will get more” this is the basis of the system. A worker put under the system does not think about the quality of the product he produces but he is interested to produce as many as he can.
A strict supervision may check deterioration of quality, no doubt; but, in general, it can be said that time wage system improves quality and piece wage system improves quantity.
It cannot be said straightway which system is better. It all depends on the circumstances. An enterprise more interested in production than quality, will base its wage system on piece-rate, whereas the enterprise interested in quality will introduce wage system based on time. Of course, the question of supervision must be kept in mind to achieve the desired objectives — whether quantity or quality.
