Q. Show factors influencing employee remuneration:
1. Labour market: demanded for and supply of labour influence wage salary fixation. A low wage may be fixed when the supply of the labour exceeds the demand for it. a higher wage will have to be paid when the demand exceeds supply, as in case of skilled labour. A paradoxical situation is prevailing in our country excessive unemployment is being juxtaposed with shortage of the labour. While unskilled labour is available in Planty, there is a shortage of techniques, computer specialists and professional managers.
2. Bargaining: A wage rate also depends to a large extent on a relative bargaining power of the trade unions or workers and employees. Where labour unions are strong enough to force the employers, the wage will be determined at a higher level in comparison to other units where unions are weak.
3. Cost of living: progressive employers do not leave the wages to be determined by the blind forces of demand and supply. They take due to notice of the cost of living for the workers at that place and try to fix the wages as to ensure a decent living wage to workers. Cost of living varies under inflationary and deflationary pressures, where employees do not show enough awareness, labour unions, if strong, come out with a demand of wage adjustment according to the cost of living index number.
4. Condition of production market: the wage levels will be influenced by the degree of competitions prevailing in the market for the product of the industry. If it is a perfect competitive market the wage level may be at par with the value of the cost with the value of the net additions made by the workers to the total output. But in any given industry or occupation, wages may not reach this level if imperfect completion exists in the product market.
5. Comparative wages: wages paid by the other firms in the same market for similar work also influence the wage level. Wage rate must also be consistent with the wages paid by other firms in the same industry. The comparative wages will increase the job satisfaction among the workers.
6. Ability to pay: wages rate are influenced by the ability of industry or firm to pay its workers. Those firms which are earning huge profits may naturally afford much better wage rates and more facilities to the workers in comparison to those firms which are earning only marginal profits.
7. Productivity ob labour: Productivity ob labour is concerned to be the main basis of wages determination. In firms, where productivity of labour is high, higher wages are paid as compared to other jobs which do not require the same degree of skill, responsibility or risk.
8. Job requirements: a worker is compensated according to the job requirements. If a job requires higher skill greater responsibility and the worker placed on that job will naturally get higher wages in comparison o other jobs which do not require the same degree of skill responsibility or risk.
9. Government policy: since the bargaining power of the workers is not enough to ensure fair wages in all industries the government has to inferior in regulating wage rate to guarantee minimum wages rate in order to cover the essential of a decent living.
10. Good will of the company: a few employers want o establish themselves as good employers in the society and fix higher wages for their workers. It attracts qualified employees.