Wages and Compensation Questions and Answers

Answer: D

The item that is not a determinant of wages is performance appraisal.

Wages are influenced by prevailing wages in the market, by the bargaining strength of unions, and by job evaluation, which ranks jobs and fixes their relative pay. Performance appraisal assesses an individual's performance and is used for decisions on promotion, training and merit pay, so it is not a determinant of the wage level in the way the other three are.

Answer: C

Job evaluation is the systematic process of determining the relative worth of a job from its content and how it functions in the organisation, usually to fix pay grades. Job analysis only collects and records the facts about a job's duties and requirements, and it comes before evaluation. Job grading is one method of job evaluation, a ranking into predetermined classes, not the name of the whole process, and 'job determination' is not a standard term. The definition in the question therefore fits job evaluation.

Answer: D

Nominal wages are converted into real wages by the Consumer Price Index, which measures changes in the price of the basket of goods and services consumed by workers, so real wages equal money wages divided by the price index. The Human Development Index and the Poverty Index are measures of well-being and deprivation, not price indices. The Wholesale Price Index reflects wholesale prices, not what workers pay at retail, so it is not the usual deflator for wages.

Answer: C

The matching is a-iii, b-i, c-iv, d-ii. Adam Smith said that labour is the real measure of the exchangeable value of all commodities. David Ricardo defined the natural price of labour as that which enables labourers to subsist and perpetuate their race. J.S. Mill put forward the wage fund doctrine, under which wages cannot rise unless the fund increases or workers decrease. Michal Kalecki's view is that wages are a residual share left after the capitalists' share. Other codes swap these thinkers.

Answer: B

The statement that social prejudices do not influence wage differentials is not true. Prejudice about caste, sex or region affects what different groups are paid, so social factors do influence differentials. The other statements are true: differentials arise from imperfections in the labour market, inter-industry differentials are bound to occur because industries differ in profitability and skill needs, and geographical differentials are common across regions.

Answer: C

Dr. Aykroyd's formula is used for determining minimum wages. It works from the minimum food requirement in calories of a worker, as set out by Dr. Aykroyd, and the 15th Indian Labour Conference used it in framing the norms of the need-based minimum wage. The Royal Commission on Labour dealt with labour conditions generally and did not give a minimum wage formula, while Adarkar's and the Rege Committee's names are tied to other wage questions and not to this nutritional measure. The answer is Dr. Aykroyd's formula.

Answer: B

The Rowan Premium System is the plan in which a worker is guaranteed a minimum time wage, a standard time is fixed for each job, and if the work is done in less time the worker gets a bonus equal to the proportion of the time saved to the standard time.

In the Halsey plan the worker gets a fixed percentage (often half) of the time saved. The Barth and Emerson systems are different: the Barth plan uses the square root of the product of standard time and time taken, and Emerson's plan pays a bonus according to efficiency levels.

Answer: C

The key counts purchasing power of people as not a factor for wage determination.

Wages are determined by the cost of living, the prevailing wages for similar work in the area and industry, the productivity of labour, the employer's ability to pay and bargaining strength. These are the standard factors that fixing authorities consider.

The general purchasing power of people in the society is a wider economic concept and is not treated as a direct factor in fixing the wages of workers. Note for reviewers: the item is debatable, and the key is accepted as printed.

Answer: D

The item that is not a type of wage differentials is social.

Wage differentials are the differences in wages among workers, and they arise by occupation, by geographical area and by industry, according to the skill needed, the cost of living and the capacity of the industry to pay.

Social differences in status are not set out as a type of wage differential in the standard classification.

Answer: C

The concepts of minimum wage, fair wage and living wage were given by the Committee on Fair Wages.

The Committee on Fair Wages, appointed in 1948 and reporting in 1949, set out the three levels of wages. The minimum wage is the lowest, covering the needs of the worker. The fair wage lies between this and the living wage, and the living wage allows a decent standard of living.

The Royal Commission on Labour and the Commission of 1969 discussed wages, but the three concepts are credited to the Fair Wages Committee in the key.