1. External
Factors:
Ø
Labour market:
o
Demand and Supply of labour:
§ If the
demand for certain skills is high and the supply is low. the result is a rise
in the price to be paid for these skills.
§ if the
demand for manpower skill is minimal, the wages will be relatively low.
§ The Minimum
Wages Act 1948, is precisely meant to prevent labour exploitation.
o
Going Rate:
§ The going
rate system involves fixing wages/salary rates in tune with what is paid by
different units of an industry in a locality. Going rates are generally paid in
the initial stages of plant operations.
o
Productivity:
§ is measured
in terms of output per man-hour. It is not due to labour efforts alone.
Technological improvements, better organisation and management, the development
of better methods of production by labour and management, greater ingenuity and
skill by labour are all responsible for the increase in productivity. Actually,
productivity measures the contribution of all the resource factors - men,
machines, methods, materials and management.
§ productivity
can be measured at several levels - job, plant, industry or national, economic
level.
Ø
Cost of living:
o The
cost-of-living pay criterion is usually regarded as an automatic minimum equity
pay criterion. This criterion calls for pay adjustments based on increases or
decreases in an acceptable cost of living index.
o When the
cost of living increases, workers .and trade unions demand adjusted wages to
offset the erosion of real wages. However, when living costs are stable or
decline, the management does not resort to this argument as a reason for wage
reductions. The cost of living index at certain places is higher than other
cities or centres.
Ø
Labour Laws:
o Labour laws
of state and central govt.
o Wages
boards, tribunals, fair wages committees
o The Payment
of wages act 1936, the Minimum wages act 1948, The Payment of bonus act 1965,
Equal remuneration act 1976, The Payment of gratuity act 1972, The company act
1956.
Ø
Society:
o Remuneration
paid to employees has social implications too. The supreme court has been
keeping social and ethical considerations in adjudicating wages and salary
disputes.
Ø
The Economy:
o A depressed
economy will probably increase the labour supply, wages rate will be lower.
o Cost of
living will rise in an expanding economy, will impact the pay decisions.
2. Internal
Factors:
Ø
Business Strategy:
i.
Rapid growth: High salary than competitors
ii.
Stability: Average payments
iii.
Retrenchment strategy: Below average
payments, incentives.
Ø
Job evaluation and performance appraisal:
i.
Establishing satisfactory differentiation
among jobs
Ø
The Employee:
i.
Performance
ii.
Seniority
iii.
Experience
iv.
Potential
v.
Luck: Right Place at Right Time
No comments:
Post a Comment