Wages

• Meaning & Definition of Wages :

A wage is the remuneration paid, for the services of labor
in production, periodically to an employee/worker.
“Wages” usually refer to the hourly rate paid to such
groups as production & maintenance employee(“blue-
collar workers”).
According to Yoder & Heneman, “Wages are the
compensation of wage earners, the numerous
employees who use the tools & equipments for their
employers to produce goods & services that are sold by
their employers”.
 Nature of Wages
• It is Remuneration.
• Expressed in terms of Money.
• Basis.
• Payable by an Employer.
• Important Component of Labor Costs.
• Important Variable.
• Fair & Reasonable Value.
 Significance of Wages
• Act as Motivator.
• Helps in Employee Retention.
• Provides Satisfaction.
• Used to Attract Labor.
• Helps in Collecting Information.
 Types of Wages
• As shown below :

Types of Wages

Minimum Wage
Fair Wage

Living Wage
Real wage
Dif between Time & Piece Wage Payment Methods
• As shown below :
Basis of Difference Time Wage Payment
Method
1. Basis of Wage Wage is computed on the
Computation basis of time.
2. Efficiency Wages are not related with
efficiency.
3. Quantity of Production Production is at slow speed.
Hence, quantity of
production is small.
4. Quality of Production Quality production.
5. Guarantee of Minimum Minimum wages are
Wages guaranteed to workers.
6. Supervision Supervision is necessary to
control quantity of
production.
Piece Wage Payment
Method
Units of production are the
basis of wage computation.
Wages are related with
efficiency.
Speedy production. Hence,
quantity of production is
large.
Quality of production
doubtful.
Minimum wages are not
guaranteed.
Supervision is necessary to
control quality of
production.
Cntd…
Basis of Difference
7. Security of Workers
8. Liking of Trade Unions
9. Maintenance Cost
10. Advance Fixation of Cost
11. Important Factor
12. Wastage of Resources
Time Wage Payment
Method
No danger of accident
because of slow speed of
work. Life of the worker
remains safe.
Liked by Trade Unions.
Due to proper use of
machine tools, material, etc,
maintenance cost is low.
Cost of production cannot be
anticipated as the number of
units produced in a given
time cannot be ascertained.
Time is an important factor.
Less chances of wastage.
Piece Wage Payment
Method
Threat of danger of accident
due to high speed of work.
Life of worker in danger.
Opposed by trade Unions.
No proper use of means of
production due to hurried
production. Hence,
maintenance cost is high.
Costs of production can be
anticipated as wages are
already fixed per unit of
production.
Units of goods produced are
important factor.
More chances of wastage.
 PROFIT SHARING
• Meaning & Definition :
Profit sharing, when used as a special term, refers to
various incentive plans introduced by businesses that
provide direct or indirect payments to employees that
depend on company’s profitability in addition to
employees’ regular salary & bonuses. In publicly traded
companies these plans typically amount to allocation of
shares to employees.
• According to H.R. Stager, “profit sharing is an
arrangement entered into by which the employee
receives a share, fixed in advance of profits.”
 Methods of Profit Sharing
• Cash Payment Plan.
• Deferred Payment Plan.
• Combination Payment Plan.
• Stock Ownership Plan.
 Advantages of Profit Sharing
• Stabilization of Labor Force.
• Realization of Social Justice.
• Improved Industrial Relations.
• Increased Earnings for Workers.