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Factors affecting wages & salaries

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Rajesh kavathekar

This document discusses factors that influence wage and salary structures and administration. It identifies six main factors: productivity, an organization's capacity to pay, managerial attitudes, going wages and salaries paid by other companies, supply and demand of labor, and cost of living. It notes that productivity, capacity to pay, and cost of living are particularly important determinants. The document also lists some additional influencing factors such as labor costs, job requirements, union pressures, an organization's desire to build goodwill, and government policies and legislation.

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RAJESH KAVATHEKAR MBA-I SEM-II ROLL NO-15
  According to D. C. Beach, “Wage and salary administration implies the establishment and implementation of sound policies and principles of employee compensation”. DEFINATION
Wages structure implies the wage rates for all the jobs within an organisation, industry or local market area. Generally, organisation maintain two parallel wage or salary structures. One can be for hourly rated and another cab be for salaried employees. All organisation cannot have the same wage and salary policy. Some organisation pay minimum necessary to attract the desired number and kind of workers. They just pay the minimum wage rate according to the legislation in the existence. While some organisation pay much more than that. MEANING
 1. PRODUCTIVITY : Productivity of a candidate or an employee is very important factor which affects the wage or salary rate. High wages and low costs are possible only when productivity increases considerably. Productivity differs from organistation to organisation, industry to industry, region to region etc. However, productivity is considered as one of the important factors which affects the wage and salary structure. Factors influencing Wage and Salary structure and administration :
 2. Capacity of an organisation to pay : Capacity or ability of an organisation to pay also affects the salary and wage levels and wage structures. The capacity to pay much depends upon the progress of an organisation and the profits it earns. Naturally those organisation which earn huge profits also cab afford to pay much better wage rates to their employees than the organisation which earns comparatively less profit or earns merely marginal profits.
 3. Managerial Attitudes : Managerial attitude also influence on the wage and salary structure and wage and salary levels. R. A. Lester, the expert in this field observed that the desire of the top management to maintain or enhance the prestige of its organisation is major factor in the wage policy of many organisation.
 4. Going Wage and Salaries : The wages and salaries paid to the employees for comparable jobs by other organisation in the industry have an impact on the wage and salary policies, An oraganisation’s wage and salary usually tend to conform to the wage and salaries paid by other oraganisation's in the industry.
 5. Demand and Supply of Labour : A price of any commodity is determined by its demand and supply. The wage and salary rates are also determined by the demand and supply position of the labour in the labour market.
 6. Cost of Living : The employees must get sufficient amount of pay in order to satisfy their wants and maintain a certain standard of living. The cost of living pay criterian is usually regarded as an automatic minimum equity pay criterian. This criterian calls for adjustments in payment of wages and salaries based increases or decreased in an acceptable cost of living index.
 Also other factors influencing wage and salary  Labour Cost  Job requirements and the skill levels available in the labour market  Trade Union’s Pressure, strategies and bargaining capacity  Desire of an organisation to build their goodwill  Government Policy and Legislations
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Factors affecting wages & salaries

  • 2.   According to D. C. Beach, “Wage and salary administration implies the establishment and implementation of sound policies and principles of employee compensation”. DEFINATION
  • 3. Wages structure implies the wage rates for all the jobs within an organisation, industry or local market area. Generally, organisation maintain two parallel wage or salary structures. One can be for hourly rated and another cab be for salaried employees. All organisation cannot have the same wage and salary policy. Some organisation pay minimum necessary to attract the desired number and kind of workers. They just pay the minimum wage rate according to the legislation in the existence. While some organisation pay much more than that. MEANING
  • 4.  1. PRODUCTIVITY : Productivity of a candidate or an employee is very important factor which affects the wage or salary rate. High wages and low costs are possible only when productivity increases considerably. Productivity differs from organistation to organisation, industry to industry, region to region etc. However, productivity is considered as one of the important factors which affects the wage and salary structure. Factors influencing Wage and Salary structure and administration :
  • 5.  2. Capacity of an organisation to pay : Capacity or ability of an organisation to pay also affects the salary and wage levels and wage structures. The capacity to pay much depends upon the progress of an organisation and the profits it earns. Naturally those organisation which earn huge profits also cab afford to pay much better wage rates to their employees than the organisation which earns comparatively less profit or earns merely marginal profits.
  • 6.  3. Managerial Attitudes : Managerial attitude also influence on the wage and salary structure and wage and salary levels. R. A. Lester, the expert in this field observed that the desire of the top management to maintain or enhance the prestige of its organisation is major factor in the wage policy of many organisation.
  • 7.  4. Going Wage and Salaries : The wages and salaries paid to the employees for comparable jobs by other organisation in the industry have an impact on the wage and salary policies, An oraganisation’s wage and salary usually tend to conform to the wage and salaries paid by other oraganisation's in the industry.
  • 8.  5. Demand and Supply of Labour : A price of any commodity is determined by its demand and supply. The wage and salary rates are also determined by the demand and supply position of the labour in the labour market.
  • 9.  6. Cost of Living : The employees must get sufficient amount of pay in order to satisfy their wants and maintain a certain standard of living. The cost of living pay criterian is usually regarded as an automatic minimum equity pay criterian. This criterian calls for adjustments in payment of wages and salaries based increases or decreased in an acceptable cost of living index.
  • 10.  Also other factors influencing wage and salary  Labour Cost  Job requirements and the skill levels available in the labour market  Trade Union’s Pressure, strategies and bargaining capacity  Desire of an organisation to build their goodwill  Government Policy and Legislations
  • 11.