Notes On Theories Of Wages:

       The term wages has been interpreted in different ways. It refers different meaning such as wage rates, the aggregate earning of the working class, average hourly earnings etc. But in the context of labour management, wages refers to the remuneration which is paid for the services of labour engaged in the process of production.

       The wages situation is very confusing, but generally fair wage concept have been suggested for adoption. They are:

I. The Minimum Wages:

       This concept represents not only the subsistence wages but also some provisions for some measure of education, medical education and amenities. A need based minimum wage formula is based on certain guidelines. They are:

  1. It is applicable to a working class family of three consumption units;
  2. Catering requirements of 18 yards per- annum;
  3. Fuel, lighting and other expenses such as children, education, and medical requirements should be 20% of the minimum wages.
II. Fair Wages:

       It is the wage based on the ability to pay principle and is equal to that received by workers performing similar works. It should not be less than minimum wages but a state towards a living wages. The actual wage should be based on labour production, level of national income and the place of industry in the economy.

III. Living Wages:

       It is the wage sufficient to ensure the work men's food, shelter, clothing, and some provision for evil days. Above all, three wage concepts were recommended by the Fair wage committee appointed as a result of the govt.'s Industrial Trust 1948.

IV. Saving Wages:

       In 1955 Indian Labour conference, Shri Bishwanath Debroy of U.T.U.C. suggested the concept of saving wage. He said that the workers should be paid such a wage as would enable them to save something for rainy days.

Methods Of Payment Of Wages:

       They are essentially to measure the system of wages plan. The 1st system is very old and is related to time. The other system is related to output. I.e. quality and quantity output. The first system is usually referred to as "time wage system" and the later "piece wage system" or "payment by results". These two systems are discussed below-

1. Time wage system:

       At this system of wage payment, the worker is paid a definite amount of money for a specific period of work, which may be a day, week or month. The amount of work done by the worker is not considered here.

This system ensures a guaranteed wage to the employees. Trade unions and employees prefer this system.

2. Piece Wage System:

       When wages are paid according to work, it is called piece wages. Under this system, the workers earnings are related directly to the work done by himself or the group. There is no consideration of time. The chief characteristic of this system is that the workers income varies according to his output piece wages are preferred when larger production is required.

3. Incentive wage system:

       Attempts have been made to combine the above two system of wage payment. It consequently laid down to the progressive wage system or incentive system of wage payment. In this system calculations are made in different ways some of them are discussed below:

(i) Halsey Premium Plan:

       Under this system, a standard time is allowed for a job. For work done in correct time or more, the actual time rate is paid. If the job is completed before standard time, the worker receives a bonus payment for the time saved. Thus if a worker completes his work in 6 hours against 10 hours standard; he is paid for 6 hours standards plus 50% of four hours i.e.; 2 hours as bonus and the 50% is shared by the employer.

(ii) Raman System:

       Under this system also, a standard time is allowed for a job and a bonus is similarly paid for any time saved. This percentage is equal to the proportion of the time saved from the standard time. Thus, if a worker does the work in 6 hours against 10 hours; standard wage payable is 6 hours plus 40% of the time saved as bonus.

(iii) Differential price- Rate- system:

       This system was developed by F.W. Taylor in 1880. He has a law piece rate for output below standard and a higher piece rate for above standard. This system therefore penalizes the concept of a saving wage. Under this system, the fast workers or workers with high output are rewarded handsomely.

(iv) Grant Task Plan:

       Under this system, the worker is granted his time rate for output below standard. On reaching standard of output of the task, the worker is paid a bonus of his time wage. For output above task, high piece rate are paid.

(v) Merit Differential Price-Rate:

       This system is a modification of the Taylor system, with three instead of two rates. This is done to encourage the new and average workers. Straight piece rate are paid upto 83% of the standard output, at which a bonus of 10% of the time rate is payable, with a further 10% bonus on reaching standard output. For output above standard, high piece- rate are paid.