An important requirement of all employees is an adequate wage or salary which is commensurate with the responsibilities and duties involved.

The term wage is used to refer to pay directly calculated on the basis of time worked. The term has been used to denote the payment for casual and low skilled workers whose positions are temporary and not subject to significant welfare benefits that are normally assigned to salary positions. Most unionisable employees are found in this category.

The distinction between wages and salaries is still preserved in some areas of work.  The differences lies in the type of work being done by the employees – administrative and clerical workers are paid salaries, whereas manual workers and machine operators receive wages.

Wages are payments made weekly, paid to employees in manual grades.


  • Minimum Wage-A minimum wage must provide not merely for the bare sustenance of life but for the preservation of the efficiency of the worker by providing some measure of education, medical requirements and amenities.
  • Living Wage-It represents a standard of living, which is provided not merely for a bare physical sustenance but decency, protection against ill-health, requirements of essential social needs and some insurance against the more important misfortunes including old age.
  • Fair Wage – while the lower limit of the fair mage must be obviously the minimum wage, the upper limit is equally set by what may broadly be called the capacity of industry to pay.

The minimum wage is a uniform wage for the country as a whole.  This is usually fixed by the government.  This is by all means impracticable and so has not been in the interest of the workers.  Without a check on prices, it is infeasible to check wages.

Pay determination is no small matter for the organization.  Quite apart from all the internal pressures on management to set acceptable levels of pay, there are considerable external constraints imposed by legislation.

Managers should plan wages and salaries systematically taking account of external and internal influences on the ultimate costs involved, and ensure fair and equitable treatment for men and women alike.

The payment of wages is the employers’ legal obligation to his or her employees.  Wages levels are a matter of judgment and negotiation.  If an employer were free he would probably pay the minimum.

When establishing wages system in an organisation certain guides can be followed;

  • There should be an aim to pay salaries and wages at least equal to those paid for similar jobs in the area or in the industry.
  • Whenever possible, some form of job evaluation should be employed.
  • Employees should be rewarded for effort made. More efficient employees should be paid more than the less efficient ones.  Incentive payments may be the solution here.
  • Jobs of equal status should be paid the same wage or salary, irrespective of the person who performs the work.
  • There should be full co-operation between unions and management – with a clear system of communication for dealing with wage claims and grievances.


A well considered policy for wages would include most, if not all, of the following points: –

  1. i) Attract, retain and motivate sufficient numbers of suitable employees to meet production requirements.
  2. Encourage the optimum productivity from employees

Ensure a high level of quality of output.

  1. Recognize the value of jobs in relation to each other.
  2. Enable employees to share in the growth and prosperity of the organization.
  3. Ensure the labour costs are suitably controlled in relation to other costs and in relation to revenues.

An important feature of a wages policy is the organizations need to differentiate jobs in line with the value of their contribution to results, both to achieve equity of payment and to provide an incentive to accept greater responsibility.

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