Wages and salary

Administration
 Terminologies
• Wages- Aggregate earnings of a employee
for his service for a day, or a week, or a
month . It is the price paid for the services
of labour in the process of production.
Includes 2 parts- the basic wages & other
allowance
• Salary- compensation to an employee for
service rendered on a weekly, monthly or
annual basis.
 Wages Vs Salary
Wages Salary
2. Quantum of service 2. Quantum of service
can be measured cannot be measured
3. Shorter Service 3. Longer service
period period
4. Payment based on 4. Paid uniformly
actual production. generally on
monthly basis
• Wage rate- Wage received by a worker for a
unit of time or production excludes all other
earnings.
• Wage scale- Putting together all properly
evaluated standard wage rates arranged in
sequence according to evaluation of job &
size of rate.
• Nominal wages- Wage expressed in terms of
money.
• Real wages- Goods & services which could
be purchased with the help of money wage.
• Fringe benefit- compensation over & above
wages often not related to output,
performance or time worked
 Objectives of wage & salary
Administration
 Control of costs
 Establishment of fair & equitable
remuneration
 Employee motivation
 Maintenance of a satisfactory public
relation image.
 Functions of wage & salary
Administration
 To approve system of job description and
evaluation.
 Recommend to top management the policy
for administration of wage programme.
 To recommend changes in wage policies
and in the salary or wage level.
 To review wage and salary department
wise.
 To check all activities of the salary
administration against the company
policies.
 Principles of wage & salary
Administration
 Wage policies should be carefully developed,
having in mind the interest of….
(a) the owners
(b) the employees
(c) the consumers
(d) the community
 It should be clearly expressed in writing.
 It should be checked against the formulated
policies
 Principles (continue…)
 It must inform to the employees in right
way.
 It should be evaluated from time to time.
 Departmental performance should be
checked periodically against the standards
set in advance
 Job descriptions and performance rating
should e checked periodically to keep them
up to date
Problems in wages and salary
administration
• High pressure from employees unions for
increasing the remuneration.
• High pressure from management to
reduce cost.