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ECONOMIC & BEHAVIOURAL THEORIES OF WAGES
Wage Determination Theories ,[object Object],[object Object],[object Object],[object Object]
Subsistence Theory by David Ricardo(1772-1823) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Subsistence Theory by David Ricardo(1772-1823) ,[object Object]
PROCESS OF actual wage level adjusting to Subsistence level Prosperous  Worker (2) Less food ie Deaths(6) Wage level >  Subsistence(1)  Fewer Deaths (3) Labor increase  In supply (4) Labor demand <  Supply(5) Wages will decrease from  Subsistence level(6)  Decrease in Labor supply  & increase in wages(7)
Wage Fund Theory by Adam Smith(1723-1790) ,[object Object],[object Object],[object Object],[object Object]
Wage Fund Theory by Adam Smith(1723-1790) ,[object Object],[object Object],[object Object],[object Object],[object Object]
Wage Fund Theory by Adam Smith(1723-1790) ,[object Object],[object Object],[object Object],[object Object]
Surplus Value Theory by Karl Marx(1818-1883) ,[object Object],[object Object],[object Object]
Surplus Value Theory by Karl Marx(1818-1883) ,[object Object],[object Object],[object Object],[object Object],[object Object]
MARGINAL PRODUCTIVITY THEORY by P H Wicksteed (England) & J  B Clark(USA) ,[object Object],[object Object],[object Object]
MARGINAL PRODUCTIVITY THEORY by P H Wicksteed (England) & J  B Clark(USA) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
MARGINAL PRODUCTIVITY THEORY by P H Wicksteed (England) & J  B Clark(USA) ,[object Object],[object Object],[object Object],[object Object]
Residual Clainmant Theory by Francis A Walker(1840-1897) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Investment Theory by H M Gitelman ,[object Object],[object Object],[object Object]
Bargaining Theory of Wages by John Davidson ,[object Object],[object Object],[object Object]
The Contingency Theory ,[object Object],[object Object]
Demand & Supply Theory ,[object Object],[object Object]
Behavioral Theories of Motivation ,[object Object],[object Object],[object Object],[object Object]
Agency Theory ,[object Object],[object Object],[object Object],[object Object]
So behavioral Theories are based on ,[object Object],[object Object],[object Object],[object Object]
Wage Differential
Wage differential refers to differences in wage rates due to the location of company, hours of work, working conditions, type of product manufactured, or other factors.  It may be the difference in wages between workers with different skills working in the same industry or workers with similar skills working in different industries or regions.  Wages Differential ,[object Object],[object Object],[object Object]
Occupational Differentials Different occupations require different qualifications, skills and different degree of responsibility 1. To induce workers to undertake “more demanding”,    “more risky” jobs. 2. Encourage workers to develop skills in anticipation of    higher earnings in future. 3. To perform social function by way of determining the    social status of workers.
Inter-Industry Differentials ,[object Object],[object Object],[object Object],Arise when the workers in the same occupation and in the same area but in different industries are paid different wages. Story about a foundry ‘ Shakti Industries’  in Haora, West Bengal that makes New York City’s manhole covers.  , November 26, 2007
Personal Wage Differentials Arise because of differences in personal characteristics (age or sex) of workers who work in the same plant and the same occupation. In occupations which involve muscular work, women workers are employed but paid less than men workers “ Equal pay for equal work” I.L.O. convention (No. 100) Industrial courts Labour Tribunals Minimum Wages Committee Fare Wage Committee
Why all the labor is not done by hardened hands?
Sector Differentials Depends upon nature of workers group (organized/ unorganized) and level of economic development of the sector. Agricultural workers are not able to better their living conditions, whereas workers in industrial sectors have their own unions to fight for them.
Regional (Inter-Area) Differentials Workers in same industry and the same occupational group, but living in different geographical areas, are paid different wages. ,[object Object],[object Object],[object Object]
Summary ,[object Object],[object Object],[object Object]
Payment for labor or services to workers, especially remuneration on an hourly, daily, or weekly basis. Wages ,[object Object],[object Object],Salary  is a fixed periodical payment paid to a person for regular work or services.  Wage  is usually paid by the day or week for work or services which are of a more irregular nature.
WAGE POLICY
Wage Policy Wage policy refers to systematic efforts of the government in relation to national wage and salary system. Purpose: To regulate the structure of wages and salaries with view to achieve economic and social objectives of the government.  ,[object Object],[object Object],[object Object],[object Object],[object Object]
Wage Policy ,[object Object],[object Object]
Pay Policies Considerations ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Broadbanding ,[object Object]
STEPS ,[object Object],[object Object],[object Object]
Payment of Wages Act, 1937 Industrial Disputes Act, 1947 Minimum Wages Act, 1948 Equal Remuneration Act, 1976 To prohibit any delay or withholding of wages Authorizing all state governments to set up industrial tribunals which would look into disputes relating to remuneration Fixation of minimum rates of wages to workers Prohibits discrimination in matters relating to remuneration on the basis of religion, sex etc.  With all these Acts in place, are there no disparities in wages?
Minimum Wages, Living Wages and Fair Wages ,[object Object],[object Object],[object Object],[object Object],[object Object]
Minimum Wages, Living Wages and Fair Wages ,[object Object],[object Object]
Legal framework on wages ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
STRATEGIC PERSPECTIVE OF COMPENSATION
The Pay Model Business Goals Business  Strategy CEO Compensation Philosophy / activities serve Business Objectives Business Strategy  – This defines the direction in which organization is going in relation to its environment in order to achieve its objectives. Compensation Philosophy  – Consists of a set of beliefs which underpin the reward/compensation strategy of the organization and govern the reward policies that determine how reward processes operate
The Pay Model Business Goals Business  Strategy Compensation Plan Compensation Strategy Non-Financial Rewards Org.Structure CEO HR Head Compensation activities serve Business Objectives Compensation strategy is periodically reevaluated and the Compensation plan periodically developed ,[object Object],[object Object]
The Pay Model Business Goals Business  Strategy Compensation Plan Compensation Strategy Non-Financial Rewards Org.Structure CEO HR Head Compensation activities serve Business Objectives Compensation strategy is periodically reevaluated and the Compensation plan periodically developed ,[object Object]
The Pay Model Business Goals Business  Strategy Compensation Plan Market Surveys Compensation Strategy Job Evaluation Unit Inputs Total  remuneration Performance  Management Non-Financial Rewards Org.Structure Performance  linked Pay Individual Pay Contribution /outputs Internal Equity External Equity CEO HR Head Employee C & B/S M Pay levels / structures Compensation activities serve Business Objectives Compensation strategy is periodically reevaluated and the Compensation plan periodically developed Compensation Manager, along with team is responsible for carrying out compensation related activities
Strategic Pay ,[object Object]
Strategic compensation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Strategic Compensation Planning ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Compensation Policy Issues ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Strategic compensation Choices ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Strategic compensation theory ,[object Object],[object Object],[object Object],[object Object],[object Object]
Aspects of compensation theory ,[object Object],[object Object],[object Object]
Equity ,[object Object],[object Object],[object Object],[object Object],[object Object]
Procedural justice ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Equity Considerations in Compensation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Equity Considerations in Compensation ,[object Object],[object Object],[object Object],[object Object],[object Object]
EXTERNAL EQUITY ,[object Object]
Importance of Equity and Compensation Activities ,[object Object],[object Object],[object Object],[object Object],[object Object]

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Wage theories

  • 1. ECONOMIC & BEHAVIOURAL THEORIES OF WAGES
  • 2.
  • 3.
  • 4.
  • 5. PROCESS OF actual wage level adjusting to Subsistence level Prosperous Worker (2) Less food ie Deaths(6) Wage level > Subsistence(1) Fewer Deaths (3) Labor increase In supply (4) Labor demand < Supply(5) Wages will decrease from Subsistence level(6) Decrease in Labor supply & increase in wages(7)
  • 6.
  • 7.
  • 8.
  • 9.
  • 10.
  • 11.
  • 12.
  • 13.
  • 14.
  • 15.
  • 16.
  • 17.
  • 18.
  • 19.
  • 20.
  • 21.
  • 23.
  • 24. Occupational Differentials Different occupations require different qualifications, skills and different degree of responsibility 1. To induce workers to undertake “more demanding”, “more risky” jobs. 2. Encourage workers to develop skills in anticipation of higher earnings in future. 3. To perform social function by way of determining the social status of workers.
  • 25.
  • 26. Personal Wage Differentials Arise because of differences in personal characteristics (age or sex) of workers who work in the same plant and the same occupation. In occupations which involve muscular work, women workers are employed but paid less than men workers “ Equal pay for equal work” I.L.O. convention (No. 100) Industrial courts Labour Tribunals Minimum Wages Committee Fare Wage Committee
  • 27. Why all the labor is not done by hardened hands?
  • 28. Sector Differentials Depends upon nature of workers group (organized/ unorganized) and level of economic development of the sector. Agricultural workers are not able to better their living conditions, whereas workers in industrial sectors have their own unions to fight for them.
  • 29.
  • 30.
  • 31.
  • 33.
  • 34.
  • 35.
  • 36.
  • 37.
  • 38. Payment of Wages Act, 1937 Industrial Disputes Act, 1947 Minimum Wages Act, 1948 Equal Remuneration Act, 1976 To prohibit any delay or withholding of wages Authorizing all state governments to set up industrial tribunals which would look into disputes relating to remuneration Fixation of minimum rates of wages to workers Prohibits discrimination in matters relating to remuneration on the basis of religion, sex etc. With all these Acts in place, are there no disparities in wages?
  • 39.
  • 40.
  • 41.
  • 42. STRATEGIC PERSPECTIVE OF COMPENSATION
  • 43. The Pay Model Business Goals Business Strategy CEO Compensation Philosophy / activities serve Business Objectives Business Strategy – This defines the direction in which organization is going in relation to its environment in order to achieve its objectives. Compensation Philosophy – Consists of a set of beliefs which underpin the reward/compensation strategy of the organization and govern the reward policies that determine how reward processes operate
  • 44.
  • 45.
  • 46. The Pay Model Business Goals Business Strategy Compensation Plan Market Surveys Compensation Strategy Job Evaluation Unit Inputs Total remuneration Performance Management Non-Financial Rewards Org.Structure Performance linked Pay Individual Pay Contribution /outputs Internal Equity External Equity CEO HR Head Employee C & B/S M Pay levels / structures Compensation activities serve Business Objectives Compensation strategy is periodically reevaluated and the Compensation plan periodically developed Compensation Manager, along with team is responsible for carrying out compensation related activities
  • 47.
  • 48.
  • 49.
  • 50.
  • 51.
  • 52.
  • 53.
  • 54.
  • 55.
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  • 57.
  • 58.
  • 59.