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Unit 7: Remuneration and Incentives

usage in which wage rates or earnings for different periods are compared, real wages reflect Notes
adjustment to changes in the price level.
(ii) Minimum Wages: According to fair wage committee, the minimum wages must also provide
for some measure of education and medical, requirements and other amenities. The concept
of minimum wage connotes different standards in different countries. In Indian reference,
minimum wages means that minimum amount which the labour or workers thinks necessary
for the base sustenance of life but for the preservation of the efficiency of the worker.
(iii) The Living Wages: The living wages, according to the committee on fair wages, represented
the highest level of the wages and naturally it would include all amenities which a citizen
living in a modern civilized society was entitled to except when the economy of the country
was sufficiently advanced and the employer was able to meet the expanding aspirations
of his workers. After considering various observations made by Indian and foreign
authorities, the committee observed that “the living wage should enable the male earner to
provide for himself and his family not merely the bare essential of food, clothing and shelter
but a measure of frugal comfort including education for the children, protection against
ill-health, requirements of essential social needs and a measure of insurance against the
more important misfortunes including old age”.
(iv) Fair Wages: Fair wages is that wages which the labour gets for his work which is just
near to minimum wages and living wages. Generally, current rate of wages, being paid in
the organisation are known as fair wages. With a view to bring about improved relations
between labour and management in modern age and effort has been made that labour
should get a fair deal at the hands of managers of organisations. With this end in view,
however, various proposals were under taken at the industries conference in 1947 as a
resolution known as the industrial truce resolution was passed.

Notes The resolution is provided for the payment of fair wages to workers or labour and
to implement this part of the resolution, the Indian government appointed a fair wages
committee in 1948 to determine the principles on which fair wages should be based and to
suggest the lines on which those principles should be applied.

Essential Features of an Effective Wage Plan

A wage system or plan will be treated as fair if it has the following features:
(i) There should be guaranteed minimum wages at a satisfactory level,
(ii) The system should be flexible to permit any necessary variations which may arise,
(iii) The system should aim at increasing the morale of the workers and reducing labour
turnover,
(iv) The system should not be in violation of any local or national trade agreements,
(v) The method should be simple and capable for being understood by the workers,
(vi) The wages should be related to the effort put in by the employee. It should be fair to both
the employees and employer,
(vii) The operating and administrative cost of the method should be minimize,
(viii) The system should keep in view the wage rate in the same area or organisation,
(ix) The system should be correlated to the capacity of the industry or organisation to pay, and

(x) The system should ensure equal wage for equal work or equal job.

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