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A. Employees should get the best pay according to their education, experience, and cost of living. After all, well-paid employees are most productive and employee turnover is less. Extra benefits should be given by the employer voluntarily. Employee ignorance regarding wages and benefits should not be taken advantage of. B. Employees should get wages according to supply and demand of labor. If you can hire someone for a lower wage, then by all means do so! After all, profit maximization is the firm's main aim.
A) In most regimes wages are set by legislation, internal policy, iindividually negotiated terms, collective agreements or court awards but mostly on the concept of ILO convention No. 100 on equal remuneration for men and women workers for work of equal value. Generally the base compensation model depends on cost of living indices and ultimately on the ability to pay. Best practice augments this with gain sharing and therefore organizations are encoraged to adopt productivty based models where the best performing receive higher rewards based on SMART goals.
B) Compensation based on supply and demand of labour is archaic and exploitative. While the cost of other factors of production can be internally regulated to an extent, the cost of living cannot be mitigated in the same manner therefore other factors come into play such as profit, gain sharing, retention, competition etc...
Hi Sir,
The correct I think is the middle path between the2 options. If I pay the bare minimum wage I could be saving cost but I could be inviting trade unions to set shop in my company. Even if my industrial sector comes in the Special Economic Zone list where labour laws do not work I could be facing attrition and unofficial trade unionism. But if I pay too much to my employees my cost would go up.
· An incentive based on productivity would be the answer.
· An employee who has performed will for a long time should be recognized and at least considered for promotion. Avenues should be opened to him /her to groom himself for the next level
