What are the essentials of an ideal wage payment system.

[laji]

What internal and external factors should management take into account in formulating its wage policy?

[nbm]

A wage policy should possess certain fundamental characteristics to serve the long term interests of all concerned— workers, management and consumers. These characteristics are as follows:
(1) Linked with Productivity—A wage policy must be linked with the productivity of the workers. If a wage policy is not related to productivity, it will not be fair either to management and consumers or to workers.
(2) Linked with Job-requirements—Wages should be linked with the job requirements and skill. Due consideration should be given to such factors as skill, length of time required in learning, versatility required.
(3) Lower Cost of Production—The wage policy should result in a reduction of unit cost of manufacture lowered prices and higher profits. All the three parties— workers, management and consumers— should participate and share the gains of higher productivity (a) workers by way of higher wages and incentives (b) management by way of lower and higher profits © consumers by way of better quality and lower price.
(4) Incentive System—The wage policy should include an incentive system for the efficient workers. The system should provide sufficient incentives to workers to work hard and with great care. It should enable an efficient worker to earn more.
(5) Proper Wage differentials—The wage policy should have a proper wage differential based on proper job evaluation so that wages earned by different categories have a proper relation to the content and its worth.
(6) Guarantee of Minimum Wage—The wage policy should guarantee minimum wage to protect the interests of workers against conditions beyond their control. The wages policy should take care of minim um wage and the essential needs of the workers.
(7) Flexibility—Wage policy should be flexible in order to meet changing conditions. It should be adaptable to necessary changes.
(8) Simplicity—The wage system should be simple to understand otherwise the worker will look at it with suspicion. A complete wage system may lead to strikes and agitations and may be a hindrance to a harmonious employer-employee relationship. The wage policy should not have any element of ambiguity or uncertainty.
(9) Communication—Wage is the centre of all disputes to maintain good industrial relations, it is necessary that the employees and the union must be adequately informed above the procedures used to establish the wage rates. Every employee should be informed of his position in the wage structure.
(10) Similar to other firms—The wage policy should consider the wages being paid in other firms in the same locality and of the same industry. It will reduce the labour turnover.