Page 145 - DMGT106_MANAGING_HUMAN_ELEMENTS_AT_WORK

Unit 6: Compensation and Rewards

(i) The standard working family should consist of three consumption units. Notes

(ii) The minimum requirements of food should be calculated on the basis of net intake of
calories as recommended by Dr Aykroyd.
(iii) The clothing requirements should be taken as 18 yards per head per annum.

(iv) As for housing, the rent corresponding to minimum provided under the Government
Industrial Housing Scheme.
(v) Fuel, lighting, and other miscellaneous items should constitute 20 percent of the total
minimum wage.
However, need-based wage has many practical difficulties. If wages are raised to the need-
based wage level and there is no corresponding increase in productivity, there is bound to
be inflationary rise in prices. Further, the capacity of the industry to pay is relevant. This
capacity of industry to pay will depend on the productivity of labour.

Linking Wages with Productivity
Improvement in wages can result mainly from increased productivity. However, no attention
is being paid to productivity, and wages are being either increased on an ad hoc basis or
on the basis of cost of living. The Third Plan observed that ‘for workers no real advance in
their standard of living was possible without steady increase in productivity, because any
increase in wages generally beyond certain narrow limits, would otherwise be nullified by
a rise in prices’. However, linking wages with productivity gives rise to the following
difficulties:

1. Productivity in India is low. Since productivity is low, wages will have to be low. This
position is totally unacceptable to the workers.
2. Employers are opposed to the linking of wages with productivity because they are not
interested in productivity but profitability.
3. Even employees are opposed to the linking of wages with productivity because they
feel that low productivity is due to poor management.

4. Employers argue that the raise in output is not due to the worker’s effort but because
of improvement in technology, plant and machinery.
5. There is the difficulty of assessing productivity especially in industries where the
output does not consist of standardized units.
Suitable Wage Policy

A suitable wage policy in a developing economy should aim at:
1. Containing the rise in prices which can be achieved through a suitable monetary and
fiscal policy.

2. Linking wage increases to increase in productivity.
6.3.4 Principal Constituents of a National Wage Policy

Three reports on national wage policy were presented in the post-independence period. They
are:
1. Report of the National Commission on Labour (1969)

2. Professor S. Chakrovarty Committee Report (1973)
3. S. Bhoothalingam Committee Report (1978)
The above mentioned reports have raised several issues concerning wage policy. They are:

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