Wages and Compensation Questions and Answers

Answer: D

Job evaluation is the process of determining the relative worth of the various jobs within the organisation so that differential wages may be paid to jobs of different worth. Job recruitment is attracting candidates, job identification is naming the job, and job specification lists the qualities required in a person to do the job. Only job evaluation deals with the value of jobs.

Answer: C

The statement that is not an objective of wage policy is 'Augmentation of malpractices in the drainage of wages midway in the flow of remuneration from the top level to the lowest employee'. A sound wage policy tries to reduce, not increase, such malpractices. The other statements are objectives: to raise the living standards of the people, particularly the working class, to give workers the highest possible wages their economic conditions allow, and to reduce in stages the difference between private and public sector wages.

Answer: D

All three are social objectives of wage policy. Setting standards for safety and fair pay of labourers, protecting wage earners from the adverse effects of economic fluctuations such as inflation, and giving proper incentives to workers who work more, so that increased production may improve the economy, are all aims of wage policy that serve society. As the key lists all three, the shorter options are incomplete.

Answer: B

The correct matching is the Wage Fund Theory with John Stuart Mill (iii), the Marginal Productivity Theory with John Bates Clark (i), the Bargaining Theory with John Davidson (ii) and the Investment Theory with Gilelman (iv). The code is iii i ii iv.

Option (A) gives the Wage Fund Theory to John Davidson. Option (C) gives it to Gilelman. Option (D) gives it to John Bates Clark. Mill's version of the wage fund doctrine is the one in the key.

Answer: A

The marginal discounted product of labour, as a modified version of the marginal productivity theory, was advanced by Taussig, the American economist who held that wages equal the discounted marginal product of labour.

Kalecki is wrong because he is known for the degree of monopoly theory. Ricardo is wrong because he is a classical economist known for rent and the wage fund type of ideas. Adam Smith is wrong because he wrote on wages long before marginalism.

Answer: C

A living wage is the amount that lets a worker live in reasonable comfort, taking account of all the obligations an average worker would have, and it is the highest of the three levels in the report of the Committee on Fair Wages. A minimum wage only keeps body and efficiency going, a fair wage lies between the minimum and the living wage, and a nominal wage is the money wage paid, whatever its purchasing power. So the description is of the living wage.

Answer: B

A corporate wide pay plan that uses a structured formula to share a portion of annual company profits with employees is profit sharing. Gain sharing is based on gains in productivity or savings in costs of a unit, and an ESOP gives employees ownership of shares. Since only profit sharing fits the description, 'all of the above' is wrong. The formula in profit sharing ties the payment to company profits for the year and does not depend on the output of the employee's own unit. Gain sharing, by contrast, is based on improvements in productivity, and ESOPs give workers stock in the company.