Understanding Wage and Salary Administration: What's the Difference and Why It Matters?

Hello,

Can anyone tell me the definition, goal, and significance of wage and salary administration? Also, what is the difference between wage and salary?

Dear Aditi,

Please refer to the ID Act for the definition of wages. Normally, the remuneration paid to a worker on a daily, weekly, or monthly basis is called wages. Monthly remuneration for staff is referred to as salary.

Regards,
Bhushan

Hello friend,

May I be able to provide the answer to your query?

MEANING OF WAGE AND SALARY

All remuneration capable of being expressed in terms of money, which would, if the terms of employment expressed or implied were fulfilled, be payable to a worker in respect of his/her employment, or of work done in such employment.

Wage represents hourly rates of pay, and salary refers to the monthly rate of pay, irrespective of the number of hours put in by an employee. They differ from employee to employee and depend upon the nature of the job, seniority, and merit.

Generally, both terms are taken as similar and the same, but there is some difference which we have discussed below.

IMPORTANCE OF WAGES

1. Wages are the most important component of labor costs, which also include non-wage costs such as employers' social contributions and taxes.

2. Wages represent an important variable taken into account by employers in their attempt to improve their competitive position in national and international markets.

3. Importance of wages within labor costs, collecting information on the different components of labor costs while identifying how far they influence employers' decisions regarding employment, investment, and capital relocations.

4. It may be a direct use of governments, trade unions, and employers to better understand the role played by wage and labor costs in a highly competitive and globalized environment.

Difference between Wages & Salary

Wage usually refers to an hourly rate, and salary to a weekly or semi-monthly rate. So if a wage earner works 40 hours one week and 45 the next week, he gets paid more for the second week. A salaried worker works long enough to get the job done and usually gets the same pay every payday.

Advantage of Salary vs. Wage

Salary workers tend to get better benefits. They also get paid time off, which isn't always true for hourly workers. They don't have to punch a time clock. And the salary is a fixed amount every pay period, which makes it easier to set a budget. Usually, people checking credit prefer to see a salary, which provides a consistent paycheck without any fluctuations due to schedule changes and illness, etc.

On the plus side, hourly workers get paid for overtime.