Characteristics or Features of Sound wage system
A sound wage system has the following characteristics.
1. Fairness in paying wage
Reasonable wages should be paid to the workers. Wage is determined on the basis of scientific time and motion study. It is fair to both employers and employees.
2. Minimum Wage Guarantee
An employer should pay minimum wages to workers as per the provisions of Minimum Wages Act. Over the minimum wages, an employer can fix the wages and guaranteed by considering the cost of living.
3. Link Between Effort and Remuneration
Remuneration is fixed only on the basis of the efforts required to complete such a job or order. If so, an employee gets high remuneration for taking high or more efforts and vice versa.
4. Satisfaction of Workers
A wage system should satisfy the workers. If so, there will be high morale and low labour turnover among workers.
5. Conforming Trade Agreements
Some organizations may enter into an agreement with trade union regarding wage payment. If so, the provisions of such trade agreements should be considered and reflected in the wage system.
6. Work Guarantee
An employee prefers to work in all the working days. No worker prefers to work only in few days and idle for many days. Hence, the management should make an arrangement in which the work is available to all the workers continuously in all working days.
7. Restricted Provision
A worker may be paid on the basis of output. If so, he/she may produce more number of units to earn more. This will lead to over production, inferior quality in production, more wastage, spoilage, scraps, defectives, too much depreciation of machine, break down of machine, health problem of workers etc., Hence, the output level is fixed for a specified time of working hours.
8. Cost of Implementation
The cost of implementation of wage system must be as low as possible.
The wage system should not be rigid. If the situation changes, some change may be incorporated in the wage system without much difficulty.
Factors influencing sound wage system
The management should consider the following factors for adopting sound wage system.
1. Existing Wages
The wages payable in a specified area is influencing the company to fix the wage rate. Generally, the existing wage is payable only on the basis of nature of job, and demand made by the workers.
Most of the organizations fix the wage on the basis of productivity of employees. But, in practice, the company is not able to measure the productivity of any worker. Even though, the company also considers the productivity before fixing a wage for the worker.
3. Cost of Living
The cost of living is continuously raising due to inflation. Hence, the companies are paying wages on the basis of cost of living index at the maximum.
4. Ability to Pay
A company can fix the wages according to its earning capacity. If the earning capacity is high, the ability to pay the wage is also high and vice versa. In the case of new company, wage is fixed by having mutual understanding with workers.
5. Maintaining An Efficient Labour Force
A wage system should attract efficient workers who are working in other companies and retain the existing efficient workers. Hence, the management should give due weightage to the efficiency of workers instead of other qualities of workers.