WAGES AND SALARY ADMINISTRATION. Chapter 10 Wage Policy

Transcription

1 WAGES AND SALARY ADMINISTRATION Chapter 10 Wage Policy

2 Objectives of wages Investment Internal price stability Worker efficiency A more effective distribution of the labour force The international competitiveness of the economy An influx of foreign capital

3 Objectives of wage policy as laid down by ILO publication for developing countries: To abolish malpractices and abuses in wage payment To set minimum wage for workers whose bargaining position is weak To obtain for workers a just share in the fruits of economic development To bring about efficient allocation and utilization of man power through wage differentials and more appropriate systems of payments by results

4 Need for Wage Policy There are a number of obstacles in the way of evolving wage policy which are further compounded by population pressure, growing inequalities of income, historical past, dualism in the economy, increasing unemployment and low rate of growth There is an urgent need in or country to guarantee a certain minimum living wage to the workers, so as to remove sweating and to improve productivity A progressive and realistic wage policy is an instrument in attaining social objectives

5 Formulation of Wage Policy in India With the upsurge of organized labour movement and its alignment with the nationalist movement, the government began to take a positive interest in labour matters Provision of adequate living wage and recognition of the principle of equal remuneration of work of equal value figure among the objective of ILO

6 In 1928, the International Labour conference adopted a convention urging the creation of a machinery for fixing minimum wages The Whitley Commission, recommended the setting up of a machinery for the fixation of minimum wages The Fifth Indian Labour Conference and the Standing Labour Committee discussed the problem of minimum wage fixation

7 Policy in Post-Independence Period The government embarked upon a series of legislative and other measures for amelioration of the pathetic conditions of the working class soon after independence Evolution of wage policy started with the Industrial Truce Resolution unanimously adopted in a tripartite conference in December, 1947 A number of committees and commissions, wage boards, tribunals, pay commissions were set up

8 Policy Enunciated in the Plans The First Five Year Plan ( ) contained some statements regarding wage movement and its repercussions on economic stability of the country The Second Five Year Plan ( ) laid great emphasis on the fact that an improvement in wages could only come about as a result of increased productivity and strongly recommended the system of payment of results The Third Five Year Plan ( ) did not offer any specific in the area of wage policy Cont

9 The Fourth Five Year Plan ( ) three useful observation: The price stability id basic to wage policy The need for linking wage increases with increases in productivity The necessity to extend the system of payment by results by agreement with workers and in the atmosphere of good industrial relations The Fifth Five Year Plan ( ) stated that the reward structure of the industrial employees in terms of wage and non wage benefits must be related to performance records in industrial enterprises Cont

10 The Sixth Five year Plan ( ) stressed on a wage policy stating: To narrow down the existing inequalities and to eliminate malpractices in regard to wage rate and wage payment To lay down criteria for fixation and revision of minimum wages and wage payment To raise the level of minimum wages in such a manner that soon the concept of a need based minimum wages become a reality To make conscious efforts to remove marked disparity in wage levels To extend the system of productivity-linked bonus Cont

11 The Seventh Five Year Plan ( ) observes that an important aspect of labour policy pertains to the formulation of an appropriate wage policy The Eighth Five Year Plan ( ) has suggested for adequate levels of earnings, safe and humane conditions of work, and access to some minimum social security benefits The Ninth Five Year Plan ( ) has attempted to create conditions for improvement in labour productivity and for provision of social security to supplement the operations of the labour market

12 Recommendations of Wage Policy The planning commission in Feb 1973, set up a committee of wage policy when faced with the dilemma as to what should be a wage policy which could be applied as a permanent feature of our development strategy. The Committee appears to be restricted its scope to the problems of wage policy only in the organized private sector of the economy leaving out the government sector.

13 The Objectives of Wage Policy as set up by the Committee: To ensure minimum wages not below the poverty line, in the interest of health and efficiency of workers To ensure workers and employers a due share in the fruits of growth To rationalize inter-occupational, inter-industrial, and interregional wage differentials and reduce disparities in a phased manner To eliminate progressively unjustified wage differentials between the organized and unorganized sectors To compensate workers and employees foe exceptional hazards to health and life Cont

14 To compensate workers and employees to an appropriate degree for rises in the cost of living To avoid pushing up wages to a level as would encourage substitution of capital for labour To provide incentives for higher produxctivity To reduce wage disputes to the minimum To promote vertical and spatial mobility of labour To remove malpractices in the payment of wages

15 The indicators chosen by NCL in its attempt to access the general wage policy of the government since independence: The state of industrial harmony Changes in workers level of living Changes in productivity Impact of wages on prices Share of wages in the value added by manufacture

16 Recommendations of National Commission regarding Wage Policy A wage policy should be framed taking into account such factors as price level which can be sustained, the employment level to be aimed at, requirements of social justice, and capital formation needed for future growth A wage policy should take into consideration a set of principles capable of being consciously adopted to guide, by means of legislation

17 A wage policy should foster an appropriate choice of techniques so as to maximise employments at rising levels of productivity and wages Wage policy should aim at progressive increase in real wages and in conformity with the expectations of the working class

18 Arjun Sengupta Committee s suggestions regarding wage policy in public sector: Basic wage structure in public enterprises should be determined on industry basis Wage should be determined by wage commission In addition to basic wage, there should be a component linked with productivity

19 National Wage policy The need for evolving a national wage policy has been subjected to inconclusive national debates and studies sponsored both by the government and professional bodies over two decades. Certain piece-meal and ad hoc efforts have resulted in the formulation of a few components of wage policy, mostly at the micro level. Cont

20 At the macro level, some guiding principles have come to stay in the case of organized sector. They are: A national minimum floor independent of capacity of industry to pay The concept of capacity of industry to pay for arriving at a wage level above the minimum floor Instrumentality of the dearness allowance to protect the purchasing power The doctrine of differed wage and profit sharing subject to the availability of reallocable surpluses The linking of increase in wages to the increase in production A rational basis for determining the wage differentials

21 The basic objective of national wage and income policy in India: To provide minimum wages to workers employed in sweated industries To fix wage ceilings To improve the existing wage structure To control inflationary tendencies To accelerate export promotion To improve the economic and social position of the working class

22 Specific objectives of a national wage and income policy in India To distribute the national product equitably by enlarging incomes of the poorer sections of the people and avoiding concentration of wealth To regulate the growth of the disposable income To prevent the owners of the capital to take undue advantage To ensure a fair comparability of wages To prevent inflationary tendencies

23 Major thrust of Wage Policy Arresting the progressive deterioration of the purchasing power of the pay packet of the workers Effecting improvement in the distribution pattern of the national dividend among the different functional sectors Bringing an improvement in the economic conditions of the working class

24 Introducing an ideal productivity based wage policy linked to the weighted average of the rate of productivity at the national, sectorial, and firm levels Assigning due weight to two basic components- skill component and productivity component

25 Suggestions for determining a National Wage Policy It should lay down the criteria for fixation and revision of minimum wages A set of norm has to be evolved for a general minimum wage below which nobody should be paid The minimum needs of the workers may be determined on the basis of the criteria adopted by the Planning Commission Cont

26 A floor level general minimum wages may be fixed for all employments not included in the schedule to the Minimum Wage Act Minimum wage should comprise basic wage The quantum of basic wage be reviewed, if necessary at an interval of not less than five years If the minimum wage is not split up into a basic wage with a fixed dearness allowance and if it is fixed as a composite wage, how and to what interval this composite wage is required to be revised

27 Income Policy It generally refers to the composite measures undertaken by the government to regulate earnings, profits and prices, and to achieve one or more objectives relating to price stability, balance of payments, fuller employment, faster economic growth and social justice. The main objects of income policy is to prevent income rising at a higher rate than output. Income policy in the Indian context has got the dual task of fixing the wage norm and also price-freeze of wage goods.