Periodic wage revision is a fact of industry. There is no law that compels you to do it! This is an inevitable part of "collective bargaining"! Bargaining touches upon every moment and aspect of even ordinary life. Wage determination, aside of other theories of wage and as decided upon by Hon. Supreme Court in its judgement many years ago, in a case popularly known as "Unichem" case has established two fundamental aspects viz: "Industry-cum-region practice" and "capacity of the industry to bear additional burden". This is based on the fact that when dealing with matters connected industry, one must remember that it is an economic organization and the limit to spend on any item/issue (including claims of the claims of all stakeholders) is determined by the surplus it generates.
Since it not possible to accurately decide labour's contribution to prosperity/surpuls generation and as sanctified by industrial democracy, the labour is also one of the important stakeholders.
While from labour's point of view revision of wages is the way to meet rising costs of living and of improving standard of living, is necessary, the fact remains they represent the primary factor or generating/adding value to the organization like other factors.
Therefore matters to be borne in mind during wage negotiations are as under:
1) Management and labour (in matters of organizational survival and growth) are just two factors. Organization is the supreme entity. Both factors are subordinate to the organizational interests and unless the organization is able to "afford" additional costs arising out wages, its survival/growth is difficult!
2) Always operate on the principle, "quid-pro-quo" (something in return!)
3) Do not contract out of law!
4) Use negotiations as an opportunity to strengthen the organization by, for example, negotiating for elimination of wasteful practices that always creep in into the system, over a period of time!
5) If possible try to build "performance linked rise" through enhanced productivity, rejection control etc.
6) If possible bring in "multi-craft proficiencies" in your work culture!
7) Encourage "conditional payments" like attendance promotion incentives and incentices for defined targets achievement if that is possible in your system!
For the time being I suppose this response is adequate. If you desire more inputs, kindly respond with specific queries!
Incidentally, are you likely to actually enter a real life wage negotiation situation or that was just an academic curiosity! Whatever, I suppose your query is answered!
July 12, 2012
12th July 2012 From India, Pune
What you need to understand in wage negotiations with the union, mainly, is the problems faced by the workmen at large. What are the sensitive issues that are involved. It is not just about money, though they expect it. But you can handle their grievances which are non monetary also and achieve major satisfaction from them. It depends all on the company's culture. You need to examine wages in similar cos in your area which are comparable in size and product and decide.
18th October 2012 From India, Pune