Which Factors Affecting wage and salary Levels ? Wage and salary administration is essentially the application of a systematic approach to the problem of ensuring that employees are paid in a logical, equitable and fair manner.
Factors Affecting wage and salary Levels
Generally, a large number of factors influence the salary levels in an organisation. Significant among them are:
- Remuneration in comparable Industries
- Firm’s Ability to pay
- Cost of living
- Union Pressure and Strategies
- Government Legislation’s.
Factor 1: Remuneration in comparable Industries
Prevailing rates of remuneration in comparable industries constituted an important factor in determining salary levels. The organisation, in the long-run, must pay at least equal to the going rate for similar jobs in similar organisations.
Factor 2: Firm’s Ability to pay
One of the principal considerations that weighs with the management in fixing the salary levels is its ability to pay. But in the short-run, the influence of ability to pay may be practically nil, However, in the long-run, it is quite an influential factor.
Factor 3: Cost of living
The cost of living is another important factor that influences the quantum of salary. The employees expect that their purchasing power be maintained at least at the same level, if not increased by adjusting wages to changes in cost of living.
Factor 4: Productivity
An interesting development in wage determination has been productivity standard. This is based on the fact productivity increase is also the result of employees satisfaction and contribution to the organisation.
But wage productivity linkage does not appear to be so east since many problems crop up in respect of the concept and measurement of productivity.
Factor 5: Union Pressure and Strategies
The wages are also often influenced by the strength of unions, their bargaining capacity and their strategies. Unions pressurize management through their collective bargaining strategies, political tactic’s and by organizing strikes etc.
Arthur M. Ross concluded that “real hourly earnings have advanced more sharply in highly organised industries than in less unionised Industries.”
Factor 6: Government Legislation
Government legislation’s influence wage determination. The two important legislation which affect wage fixation are:
Act 1: The payment of wages Act, 1936
The important provisions of this act ensuring proper payment of wages and avoiding all malpractices like non-payment, under payment, delayed and irregular payment, payment in kind and under measurement of work.
The act covers all employees drawing the wage up to Rs. 1000/-per month. The act also stipulates time for payment of dues to the discharged employees. Under the act, fines can be levied but after due notice to the employees and the fine, deductions are restricted to 1/32nd of the wage.
Act 2: The minimum wages Act, 1948
The important provisions of this act seeks to protect the workers from under-payment of wages for their efforts. If presented the guidelines for the fixation of minimum wages which is just sufficient to meet the basic needs of workers and to keep a man’s body and soul together.
Statutory minimum wage is determined according to the procedure prescribed by the relevant provisions of the act.
The Act provides for fixing of
- Minimum wage in certain employments
- Minimum time rate
- Minimum piece rate
- Guaranteed time rate
- Overtime rate
- Basic pay and D.A.
The act also provides for revisions of minimum wage of fixed intervals. The above mention factors affecting wage and salary levels.
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