Upload
stone-cold
View
222
Download
1
Embed Size (px)
Citation preview
7/28/2019 Theories of Wages and Wage Legislations
1/35
Theories of Wages & Legislations
7/28/2019 Theories of Wages and Wage Legislations
2/35
Contents
Introduction
Maslows Hierarchy of needs
Hertzberg two factor theory of motivation Just Wage Theory
Subsistence Theory
Wage fund Theory
Standard of Living theory
Residual claimant theory
Marginal productive theory
Bargaining theory & Behavioral theories
Expectancy theories
Equities theory
7/28/2019 Theories of Wages and Wage Legislations
3/35
Maslows Need Hierarchy Theory
Maslow's need hierarchy divides human needs intofive levels
Each level represents a group of needs-not oneneed for each level
Maslows expresses the view that Man is a WantingAnimal and also that Wants are unlimited
He also suggests that people can travel down as
well as up the hierarchy Loss of existing satisfaction of needs for example,
can re-activate that level and increase its relativeimportance
7/28/2019 Theories of Wages and Wage Legislations
4/35
Hierarchy of Needs
7/28/2019 Theories of Wages and Wage Legislations
5/35
Critical Evaluation of Maslows Theory
This theory has been highly appreciated as has it
helps the managers think about motivating their
employees.
It accounts for interpersonal variations in human
behavior
Need hierarchy model is dynamic as it presents
motivation as a constantly changing force.
Here human behavior makes a total departure from
earlier approaches
7/28/2019 Theories of Wages and Wage Legislations
6/35
Herzberg Two Factor Theory
The first basic part of this model is a formally statedtheory of work behavior
The second aspect of Herzberg's work has focusedupon the behavioral consequences of job-enrichment and job-realization programmes
This model is variously termed as the two-factortheory, the dual factor theory, and the motivation-
hygiene theory. This model has been highly accepted by the
managers concerned with the problem of humanbehavior at work
7/28/2019 Theories of Wages and Wage Legislations
7/35
Continued..
Herzberg used critical incident method in his survey
for obtaining data for analysis
The respondents were asked two questions:
When did you feel particularly good about your job and
When did you feel exceptionally bad about your job
The responses obtained revealed factors that the
they were two extremes, which is related to job
satisfaction or which is related to job-dissatisfaction
7/28/2019 Theories of Wages and Wage Legislations
8/35
Hygiene factors and Motivators
Achievement
Recognition
Work itself
Responsibility
Growth
Advancement
Company Policy
& Administration
Security
Status
Salary
Working
Conditions
Hygiene
Factors
Motivators
7/28/2019 Theories of Wages and Wage Legislations
9/35
Evaluation of the theory
Intrinsic factors are variously known as motivators,
satisfiers or job-content factors.
Extrinsic factors also known as dissatisfiers, hygiene
factors, maintenance factors or job-context factors.
To achieve motivation, managers should cope with
both satisfiers and dissatisfiers, that improve hygiene
factors.
The major pitfall of this theory is that contrasting
views of satisfaction and dissatisfaction
7/28/2019 Theories of Wages and Wage Legislations
10/35
Just Wage Theory
This was the first theory on wages advocatedduring medieval period
The essence of this theory is that the worker
should be paid on the level of maintaining
himself and his family
7/28/2019 Theories of Wages and Wage Legislations
11/35
Subsistence Theory
According to Ricardo the laborers are paid
to enable them to subsist and perpetuate the
race without increase or diminution
7/28/2019 Theories of Wages and Wage Legislations
12/35
Wage Fund Theory
According to J.S.Mill, the wages are
determined of the relationship between theamount of fund allocated for the purpose of
wage payment and number of workers in a
country
Wage = Amount of fund allocated for wagepayments
Number of workers
7/28/2019 Theories of Wages and Wage Legislations
13/35
Standard of Living Theory
Karl Marx pointed out that the Wage of laboris determined by a traditional standard of
living, which, in turn, is determined by the
mode of production of the country
concerned
7/28/2019 Theories of Wages and Wage Legislations
14/35
Residual Claimant Theory
According to Walker, the wages are
determined on the basis of the amount leftafter the payment of rent, profits and interest
to land, entrepreneur and capital respectively
out of the productive value.
Amount of wages = Production Value(Rent+ Profits+ Interest)
7/28/2019 Theories of Wages and Wage Legislations
15/35
Marginal Productive theory
According to the J.B.Clark, the wages are
determined on the basis of marginal contributions of
the worker to the production
The employer stops employing further workers
where the contributions of the most recently
employed worker are equal to his wages.
7/28/2019 Theories of Wages and Wage Legislations
16/35
Bargaining Theories and Behavioral
Theories
According to this theory the wages and otherterms of employment are determined on thebasis of the relative bargaining strength ofthe two parties, the employer and theemployees.
Webbs stated that, the higgling of themarket which under a system of freecompetition and individual bargainingdetermines the conditions of employment.
7/28/2019 Theories of Wages and Wage Legislations
17/35
Expectancy theories
According to behavioral scientists, wages are determined onthe basis of several factors: Size
Nature Prestige of the organization
Strength of the union
Social norms
Traditions
Customs
Prestige of certain jobs
Level of job satisfaction
Morale
Level of performance
7/28/2019 Theories of Wages and Wage Legislations
18/35
Equities Theory
This theory emphasis on equity in pay structure of
employee remuneration. Equity theory states that an employee who perceives
inequity in his or her rewards seeks to restore equity.
The remuneration system needs to meet three typesof equity: Internal
External
Individual
7/28/2019 Theories of Wages and Wage Legislations
19/35
Dimensions of Equity
Internal Equity
Perceptions of
Fairness
Individual Equity Performance
Commitment
Motivation
External Equity
7/28/2019 Theories of Wages and Wage Legislations
20/35
WAGE LEGISLATION
7/28/2019 Theories of Wages and Wage Legislations
21/35
Contents of the Chapter
Introduction
Wage survey Wage Legislations
Payment of wages Act
Minimum Wages Act Payment of Bonus Act
7/28/2019 Theories of Wages and Wage Legislations
22/35
Introduction
We have various labor laws at the central and the
state levels.
Some of the central laws which have a bearing on
employee remuneration are:
The Payment of Wages Act, 1936.
The Minimum Wages Act, 1948.
The Payment of Bonus Act, 1976.
Payment of Gratuity act, 1972.
7/28/2019 Theories of Wages and Wage Legislations
23/35
Contd..
In addition to legal enactments, there are wageboards, tribunals, and fair wage committees which
aim at providing a decent standard of living toworkers.
India is the only democratic country in the worldwhich has attempted wage regulation on the largeregulation on so large scale through state sponsoredagencies.
With regard to managerial remuneration, the
Companies Act 1956 puts a cap on salary and
7/28/2019 Theories of Wages and Wage Legislations
24/35
Wage Survey
Survey is an investigation of current position.
Salary Survey is one of the techniques useful in salaryadministration.
The purpose of this salary is to collect competitive salarydata regarding various jobs in the labor market and providethe same for salary administration.
An salary survey enables an organization to find out whatother organizations pay for specific jobs and the basis forpayment of the existing salary level.
Most of the organizations are forced to pay the wageequivalent to the going rate or the market rate.
7/28/2019 Theories of Wages and Wage Legislations
25/35
Factors Affecting Wage/Salary
Levels
Remuneration in the Comparable Industries.
Firms Ability to pay Cost of Living
Productivity
Union Pressure and Strategies Government Legislations
7/28/2019 Theories of Wages and Wage Legislations
26/35
Government Legislations
Government legislations influence wage
determination.
The important legislations which affect wage fixation
are:
The Payment of Wages Act.
The Minimum Wages Act.
The Payment of Bonus Act.
Payment of Gratuity Act.
7/28/2019 Theories of Wages and Wage Legislations
27/35
WORKMENS COMPENSATION ACT,
1923 (As Amended Upto Act 46 of 200)
The workmens compensation Act is a
welfare legislation and its object is that the
compensation for injuries or death sustained
by the workmen be paid to him or his family
members without any delay.
The Act provides cheaper and quickerdisposal of disputes relating to compensation
through special tribunals than possible under
civil law.
7/28/2019 Theories of Wages and Wage Legislations
28/35
The Payment of Wages Act, 1936.
The important provisions of this Act are:
Ensure proper payment of wages
Avoiding all malpractices like non-payment
Underpayment
Delayed and irregular payment Payment in kind and undermeasurement of work
The Act covers all employees drawing the wage up
to Rs 1000 per month.
7/28/2019 Theories of Wages and Wage Legislations
29/35
Contd..
The Act stipulates that the organization with less
than hundred workers should pay by seventh and
the organization with more than 100 employeesshould pay by the tenth of next month.
The Act also stipulates time for payment of dues to
the discharged employees.
7/28/2019 Theories of Wages and Wage Legislations
30/35
The Minimum Wages Act, 1948
The Act seeks to protect the workers from
underpayment of wages for their efforts.
It presents the guidelines for the fixation of minimum
wages which is just sufficient to meet the basic
needs of workers and to keep a mans body and
soul together.
Statutory minimum wage is determined according to
the procedure prescribed by the relevant provisions
of the Act.
7/28/2019 Theories of Wages and Wage Legislations
31/35
Contd..
The Act provides for fixing of:
Minimum wage in certain employments
Minimum time rate
Minimum piece rate
Guaranteed time rate
Overtime rate
Basic pay and D.A
The Act also provides for revision of minimum wage
at fixed intervals
7/28/2019 Theories of Wages and Wage Legislations
32/35
The Payment of Bonus Act, 1965.
The Government Enacted the Payment of BonusAct in September, 1965.
The important provisions of the Act are: 60% of the surplus should be allocated for the
payment of Bonus.
Salary for the purpose of bonus means Pay + DA.
Minimum Bonus payable is 4% of the salary or Rs 40,whichever is higher.
If an employee is below 15 Years of age, the bonuspayable is 4% of the salary or Rs 25 whichever ishigher
If the available surplus is more than 20% of the bonus,it can be set on u to a maximum eriod of 4 Years
7/28/2019 Theories of Wages and Wage Legislations
33/35
Contd..
The Government amended the Act again in 1977. The
important provisions of this amended are:
The Industrial undertaking covered by the Act to pay
the Minimum bonus of 8.33%, irrespective of profit or
loss from the year 1976.
Investment Allowance should be taken as prior charge.
Banking Companies and Industrial Reconstruction
Bank of India are covered by this Act.
7/28/2019 Theories of Wages and Wage Legislations
34/35
OTHER MAJOR REGULATIONS
maternity Industrial Employment Act 1946
Factories Act 1948 Employees state insurance Act, 1948
Employees provident fund & miscellaneous
provision Act 1952
Payment of bonus Act 1965
Payment of gratuity Act, 1972
Equal Remuneration Act 1975
7/28/2019 Theories of Wages and Wage Legislations
35/35
Motor transport workers Act 1961
Plantations labour Act 1951 Sales promotion employees Act, 1976
Trade unions Act , 1926 ( Amended by Acts
upto of 2001)