WAGES

The study of different patterns of wage payment is important both from the academic as well as practical points of view. Wages are among the factors in the economic and social life of any community. In an economic sense, wages represent payment of compensation in return for work done. In a sociological sense, wages characterize stratification of occupational categories. In a psychological sense, wages satisfy needs directly and indirectly in response to changing employee aspirations. It constitutes one of the several elements of job satisfaction. In a legal sense, the term wages/ salaries has acquired various connotations, depending on the context and has become a subject of special law in many countries. It is most important to an industrial worker because his standard of living and that of his family depends upon his earnings. It is also important to an employer as it constitutes one of the principal items that enter into his cost of production. The government and the community at large are vitally interested in wage levels because a large number of industrial disputes and work stoppages revolving around the question of wages, bonus and allowances. Government is also concerned with wage standards, which affect the social climate of the country as well as such important parts of the economy as employment, prices and inflation, national productivity and the ability of the country to export enough goods to pay for its imports and so keep its international receipts and payments in balance. In the words of Jules Backman, What happens to wages is of critical concern to everyone. To the worker, wages represent income; to the businessman, they represent costs; and to the government, they represent potential taxes. Wages are the largest source of purchasing power; hence, changes in labour income have an important bearing on the level of economic activity. At the same time, payments for labour are the most important element of cost in our economy and thus influence the level of prices and of profits. Wages are the remuneration for the expenditure of effort in production of goods and services. The effort of wage earner may be physical, mental or a combination of the two; it may be under another direction or may be of managerial and decision-making character. But whatever his specific occupation, the wage earner supplies some form of human contribution to production and wages are reward for his contribution. Therefore, strategic management of wages and salaries is very important for organizations.

THE NEW WAGE POLICY

1. The wage policy, should be a driving force to award performance based remuneration to every employee. 2. With the improvement or upgradation in an employees role/position/accountability, the quantum of contractual wage should decrease and performance based reward should increase. 3. Adhocism in rewarding employees should be eliminated. At the same time, the management should have adequate discretion in recognising an employees performance i.e there should be due flexibility in the wage policy, based on a long term policy approach. 4. Unnecessary or overlapping positions should be merged/ avoided; with an attempt to make the job profile and job-wise remuneration match each other. Flattening of the organisation structure is also possible, with proper restructuring of the cadres and grades. 5. Wages should be performance based; performance appraisal parameters should be objective, transparent and flexible enough to change. 6. Performance bonus should be based on multiple factors like individual achievements, the organisations bottomline, employees loyalty to the organisation and their present positions and wage scales. 7. Allowances, perquisites and reimbursements should take care of the following General requirements of an employee and his family. Specific requirements of young or old employees, based on their age, familystatus and size etc. Job- based requirements Position- based requirements and rewards Location based requirements Facilities required in special situations or emergencies

STRATEGIC WAGE NEGOTIATIONS

The prerequisites of strategic wage negotiations may be summed up as follows: 1. The long term strategic advantage of such negotiations would depend on a well- defined organizational structure, staffing patterns, individual and group job profiles. 2. A stable and well-defined mechanism for individual, group and divisional performance appraisal. 3. A comprehensive wage package with due flexibility for taking care of individualistic variations.
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4. A good database on earlier revisions, the present workforce and total cost of the workforce to the organisation, change in external environmental factors and strategies of the competitors.

Result of Strategic Wage Negotiations:

The ultimate result of wage negotiations should be a win-win situation not just for the employer and employees, but also for the consumers at large; ultimately as they end up paying for every wage- hike. Any wage hike must expect 1. Improved productivity at all the phases of the enterprises value chain. 2. Drive for structural changes, if required. 3. The ability to meet adverse impact of the market conditions with the employer and employees facing them together, with equal partnership in good and bad results. 4. Efforts for shaping up the organisation to great heights.

Voluntary Retirement Scheme (VRS)

Many designs of VRS perhaps with maximum details and care taken by the designers, proved unsuccessful for the following reasons1. The response from the employees is overestimated. 2. Behavioural aspects of the launch, implementation and closure of a VRS are either neglected or underestimated. 3. The VRS very often is not designed with a detailed study of the requirements and perceptions of the employees expected to retire. 4. The VRS sometimes becomes so attractive that employees who need to be retained use the scheme and leave the organisation for better opportunities. 5. Employees are not educated properly about the details and repercussions of Post- VRS possibilities. Hence, employees do not accept a VRS although wanting to retire early. 6. The timing of declaring a VRS and its implementation is not handled strategically by considering external environmental factors. The best of VRSs have failed, simply because the timing was wrong.

7. Strategic alliances, mergers, acquisitions, amalgamation do go through a lot of HR Restructuring. This restructuring inevitably includes a VRS. Many a times, post-merger benefits are overestimated, which make a very good VRS unattractive. 8. A very complicated design of VRS or a rigid VRS becomes unacceptable.