The main principles that govern wage & salary fixation are three: * EXTERNAL EQUITY: Compare the pay of the same job in different organizations and judge if it is fair. Example: Retail store X has a Store Manager and retail store Y has a store manager (the same job in two different organizations)
* INTERNAL EQUITY: Compare the pay of different jobs in the same organization and judge if it is fair. Example: A retail store has an Assistant Store Manager and a Store Manager (2 different jobs in the same organization)
* INDIVIDUAL WORTH: Where equal pay is ensured for equal work or compare the pay of individuals who do the same job in the same organization and judge if it is fair. Example: A retail store has 2 Assistant Store Managers (2 people doing the same job in the same organization) FACTORS AFFECTING WAGE & SALARY LEVELS
* Remuneration in comparable industries
* Firm’s ability to pay
* Cost of living
* Union pressure & strategies
* Government legislations
WAGE FIXATION INSTITUTION IN INDIA
Wages are fixed by the following institutions in India:
* COLLECTIVE BARGAINING & ADJUDICATION: Collective bargaining is a procedure in which a compromise is reached through balancing of opposite strengths. If these problems are not solved through collective bargaining, they may be settled through voluntary arbitration or adjudication.
* WAGE BOARDS: This institution is set up by the government of India for fixation & revision of wages. Separate wage boards are set up for separate industries. Wage boards are not governed by any legislation but are appointed an ad-hoc basis by the government.
Each wage board consists of a NEUTRAL CHAIRMAN, TWO INDEPENDENT MEMBERS & 2-3 REPRESENTATIVES OF WORKER & MANAGEMENT EACH.
* PAY COMMISSIONS: This is another institution which fixes & revises the wages & allowances to the employees...