Wage Determination

A wage is the remuneration paid, for the service of labour in production, periodically to an employee. The wage level represents the money an average worker makes in a geographic area or in his organization.

Wage dissatisfaction and several grievances with the wages are a result of rate differences between pay rates and individuals. To avoid these dissatisfaction and grievances the concept of wage determination is brought into light, where we define a wage structure to be abided both by the employer and the employee.

Wage determination is simply a process of setting up wage rates or establishing wage structures in a particular situation or set of conditions. It is the listing of wage rates and fringe benefits for each classification of employee in any organization.

Wage determination is a concept that helps the employees get  allocated among different occupation, and areas in economy so as to maximize the national product. It also facilitates the most desirable rate of economy progress and enables full employment too.

The process of wage determination involves the following steps:

• Job analysis
• Job description and specification
• Job evaluation
• Wage surveys and analysis of relevant organizational problems
• Wage legislation and structure definition
• Rules of administration
• Differential employee appraisal

Often the wage determination is not perfect in the perspective of the employee as it is a wide subject and depends on several checks that are to be fulfilled. Several such factors include:

• Organization’s ability to pay
• Supply and demand of labour
• Prevailing market rate
• Cost of living
• Living wage
• level of skills available in the market

Hence wage determination may sound simple but actually is a widely discussed, thought upon topic that is of great utility and need in the present market.

Click here for government certification in Human Resources