Introduction to wage and salary administration



Wages and salary administration is an integral part of the management of the organization. Wages and salary is a systematic approach to providing monetary value to employees in exchange for work performed.
Among the four most important Ms, Men play a dominant role. The only way by which men can be gained, retained and satisfied is through wages and salaries. This study is made to know how the employees are graded and how they are paid wage and salaries.

Wage and salary administration refers to the establishment and implementation of sound policies and practices of employee compensation. It is essentially the application of a systematic approach to the problem of ensuring that the employees are paid in a logical, equitable and fair  manner. Wage and salary administration includes areas such as job evaluation,  development and maintenance of wage structure, wage payments, incentives, profit sharing, wage changes and related items.
It may achieve several purposes assisting in recruitment, job performance, and job satisfaction. It is the remuneration received by an employee in return for his\her contribution to the organization .It is an organized practice that involves balancing the work –employee relation by providing monetary and non-monetary benefits to employees. 

Indian Labour Organization ( ILO) defined the term wage as “ the remuneration paid by the employer for the services on hourly, daily, weekly, fortnightly basis”.
Salary is defined as a fixed regular payment, typically paid on a monthly basis but often expressed as an annual sum, made by an employer to an employee, especially a professional or white-collar worker.





After the independence and particularly after 1948, some new terms relating to wages began to be used. These are:
1.      Minimum wage :
It is a wage which must be paid to the employees, whether the firm earns profit or not. This wage provides not merely for bare sustenance of life, but also for the preservation of the efficiency of the worker. Minimum wage may be the outcome of settlement between the workers or employers but generally it is fixed through legislation.
         


2.      Living wage
Living wage is defined as “ one which should enable the earner to provide for himself and his family not only the bare essentials of food, clothing and shelter but a measure of frugal comfort, including education for his children, protection against ill-health, requirements of essential social needs and a measure of insurance against more important misfortunes, including old age.”




3.      Fair wage
A fair wage is the wage which is above the minimum wage but below the living wage.








WHY DO WE NEED TO STUDY WAGEAND SALARY ADMINISTRATION?
• To have a scientific, rational, and balanced wage and salary structure.

• In a salary administration, the employer should not feel that he employees are paid more than they deserve and the employees should not feel that they are underpaid.

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