Compensation Concept

CONCEPT OF FAIR WAGES:

Fair wages is the wage which is above the minimum wage but below the living wage. Obviously the lower limit of the fair wage is the minimum wage and the upper limit is set by the ability of the industry to pay. Between these two limits, fair wages should depend on the factors like –

1.    Prevailing rates of wages in the same occupation

2.    Prevailing rates of wages in the same region or neighbouring areas

3.    Employers ability to pay

4.    Level of national income and its distribution

5.    Productivity of labour

6.    Status enjoyed by the industry in the economy

               Hence it can be said that fair wages are determined on industry cum region basis.  When fair wages are paid employees enjoy higher standard of living. It is accepted fact that wages must be fair and reasonable. Wages is fair when the employee is able to meet its essential needs and enjoy reasonable standard of living.  ”Equal pay for equal work” serves as base of fair wage.

                According to Encyclopaedia of social science,”Fair wages are equal to those received by the workers performing work of equal skill, difficulty or unpleasantness.”