8 References
9.1 Experimental Instructions
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UNIT 5 WAGE AND SALARY ADMINISTRATION
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2.0 OBJECTIVES
At the end of this unit, you should be able to:
state the meanings of wage and salary
differentiate between wage and salary
state the purposes of wage and salary administration programme
discuss what determines wages and salaries
describe the obligations of the management to the staff
explain why authorised deductions are made from the wages of the workers.
3.0 MAIN CONTENT
3.1 Purposes of Wage and Salary Administration Programme
The wage and salary administration programme has a variety of purposes. These are as follows:1. To define the duties and responsibilities involved in each position in the hospital and determining the qualifications ad training requirements of the employee occupying the position
2. To compare positions according to mental and physical requirements, skill, responsibility and working conditions
3. To establish common titles for jobs which have similar duties and responsibilities, to facilitate dependable salary comparison
4. To establish within the hospital wage levels comparable to that prevailing in the community for similar work
5. To establish a periodic salary review system so that adjustments may be effected whenever indicated.
3.2 Meaning of Wage and Salary Administration
To the hospital, wage and salary administration means:
1. Fair and equitable wages and salaries for all employees
2. A basis for establishing, developing and maintaining good employee relations
3. Development and maintenance of good employee morale
4. A guide for administrative action concerning wages and salaries 5. A basis for facilitating control over expenditure on wages and
salaries.
To the employees it means:
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1. A basis for understanding the hospital‟s policies concerning wage levels, structures and ranges
2. A means for clarifying opportunities for development and channels for promotion
3. Greater job satisfaction and feeling of security, helping the individual attain his occupational objectives.
To the patients it means:
1. Better service to patients and their families by hospital employees, who enjoy their job and are happy with their work
2. Lower hospitalisation costs, resulting from a higher degree of employee efficiency.
3.3 Wages versus Salaries
Payment made to compensate labour for the work done is generally termed as wages. Money paid periodically to persons whose output cannot easily be measured, such as clerical staff, supervisory and managerial staff is termed as salaries. Salaries are generally paid on a monthly basis. However, in practice, these two words are used interchangeably for employees in the lower strata.
3.4 What Determines Wages and Salaries?
Demands and supply: If enough candidates are available, they will offer themselves for work at low salaries. However, if they are in short supply, they will work only if they are paid well.
Capacity to bargain: Candidates are usually not in a position to bargain, but they acquire some powers through their unions.
Government regulations: Since employees do not have the bargaining power to ask for fair wages, the government intervenes and fixes minimum wages.
Hospital’s ability to pay: The ability of the hospital to pay the rates prevalent in comparable hospitals is an important consideration. If a hospital pays less, it will find it difficult to attract and hold employees.
If a hospital can pay more, it can attract, retain and motivate its employees.
Cost of living index: In many industries, wages are linked to the cost of living index which ensures fair wages to the employees. As prices of commodities go up, wages too go up and when the index goes down, as a result of fall in prices, wages also come down but it is not so practically because employers can increase wages but cannot decrease.
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3.5 Obligations of the Management
The Payment of Wages Act, 1936, has imposed a number of obligations on employers. Basically, the management has six obligations regarding the payment of wages and salaries to its employees:
1. The management must fix a time to pay wages and salaries 2. This period must not be longer than one month
3. The management must pay within seven days of the wage period if the number of employees is less than 1,000. In the case of number of employees is more than 1,000 wages must be paid within 10 days of the wage period
4. The payment should be made on the working day and within working hours
5. The payment should be made in cash or by cheque if the employee consents to it
6. The payment should be made in full without any deductions except those authorised by law.