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  istinction/ Difference Between Minimum Wages and Fair Wages No.  Minimum Wages Fair Wages 1) The Term “Minimum wage” Literally Means “The minimum payment, an employer has to give to an employee for a particular work, i.e, the lowest limit, below which wages cannot be allowed to sink” Fair Wage is more than minimum wage but less than the living wage. 2) Section 3 of the Minimum wages Actprovides for different minimum rates of minimum wages for different localities.Fair wage is fixed, taking into consideration, the present economic position and further prospects of the Industry. 3) Components/ Constituents of Minimum Wages -(i) a basic rate of wages and a special allowance at a rate to be adjusted at such intervals and in such manner as the appropriate government may direct to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as the cost of living allowance ); or  (ii) a basic rate of wages with or without the cost of living allowance and the cash value of the concessions in respect of suppliers of essential commodities at concession rates where so authorized; or  (iii) an all-inclusive rate allowing for the basic rate the cost of living allowance and the cash value of the concessions if any.(Section 4 of Minimum Wages Act) To Determine fair wage, Following factors are taken into Consideration -1) The Productivity of Labour 2) The Prevailing rates of wages in the same industry for similar occupation in the same neighboring locality3) the Level of national income and its distribution; and4) The place of Industry in the economy of the Country  4) The Minimum Wage must, therefore,provide not merely for the bare substance of life but also for the preservation of the efficiency of a worker. For this purpose, the minimum wage must also provide for the same measure of education, medical requirement, and amenities.The Concept of fair wages, therefore, involves a rate sufficiently high enable the worker to provide a standard family with food, shelter, clothing, medical care and education for children appropriate to his status in life but not at a rate exceeding the wage-earning capacity of the class of establishment concerned. Labor Productivity What Is Labor Productivity? Labor productivity measures the hourly output of a country's economy. Specifically, it charts the amount of real gross domestic product (GDP) produced by an hour of labor. Growth in labor productivity depends on three main factors: saving and investment in physical capital, new technology, and human capital. KEY TAKEAWAYS  Labor productivity measures output per labor hour.  Labor productivity is largely driven by investment in capital, technological progress, and human capital development.  Business and government can increase labor productivity of workers by direct investing in or creating incentives for increases in technology and human or physical capital. The Importance of Measuring Labor Productivity Labor productivity is directly linked to improved standards of living in the form of higher consumption. As an economy's labor productivity grows, it produces more goods and services for the same amount of relative work. This increase in output makes it possible to consume more of the goods and services for an increasingly reasonable price.Growth in labor productivity is directly attributable to fluctuations in physical capital, new technology, and human capital. If labor productivity is growing, it can usually be traced back to growth in one of these three areas. Physical capital is the tools, equipment, and facilities that workers have available to useto produce goods. New technologies are new methods to combine inputs to produce more output, such as assembly lines or automation. Human capital represents the increase in education and specialization of the workforce.  Measuring labor productivity gives an estimate of the combined effects of these underlying trends.Labor productivity can also indicate short-term and cyclical changes in an economy. If the output is increasing while labor hours remains static, it signals that the labor force has become more productive. In addition to the three traditional factors outlined above, this is also seen during economic recessions, as workers increase their labor effort when unemployment rises and the threat of lay-offs looms to avoid losing their jobs. Policies to Improve Labor Productivity There are a number of ways that governments and companies can improve labor productivity.  Investment in physical capital : Increasing the investment in capital goods including infrastructure from governments and the private sector can help productivity while lowering the cost of doing business.  Quality of education and training : Offering opportunities for workers to upgrade their skills, and offering education and training at an affordable cost, help raise a corporation’s and an economy's productivity.  Technological progress : Developing new technologies, including hard technology like computerization or robotics and soft technologies like new modes of organizing a business or pro-free market reforms in government policy can enhance worker productivity.

Morning Exam

Sep 22, 2019

Big_Theta_AP.docx

Sep 22, 2019
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