4. Tariff and tariffless systems

The tariff system allows the enterprise to commensurate various kinds of work, taking into account their complexity and conditions of performance.

When organizing workers’ remuneration the basic elements of tariff system are wage-rates and skills handbooks, scales of charges and base wage rates.

The wage-rates and skills handbook contains the list of manufactures and trades of manufacturing branches with the description of each trade. The content and the category of work and the requirements to its executor are determined with the help of the wage-rates and skills handbook.

The scale of charges represents the set of operating tariff categories and tariff coefficients, which correspond to them.

The tariff coefficient shows by how many times the level of payment of workers of the given category is higher than the level of payment of workers of the first category.

The tariff rate is the absolute size of labor remuneration expressed in the monetary form for a unit of working time. Tariff rates can be hourly, day and monthly. Tariff rate of the first category cannot be below the minimal size of the payment established by the state.

According to the tariffless payment system wages of all workers represent a share in the wage fund either of the whole enterprise or a separate division.

The most widespread method according to this system is such method of calculation of wages when the actual size of earnings of each worker depends on the qualifying level of the worker, labor input ratio, hours actually worked.

Another method of wages determination when using the tariffless system consists in the fact that wages depend on volumes of realization. For example, the enterprise director’s salary is 1.5 % of the sum of realization, his assistants’ salary is 80 % of the director’s salary and so on according to the qualifying level.

Another variant of the tariffless system is the contract system when the enterprise and the worker make the contract for a certain time with the indication of the payment level.

5. Wages and labor productivity

The policy in the sphere of payment is a component of the enterprise management, and efficiency of the enterprise activity greatly depends on it, since wages are one of the major tools allowing the enterprise to use labor rationally. When developing the policy in the sphere of wages it is necessary to take into account the ratio of rates of the growth of wages and labor productivity.

It is possible to single out three basic models, determining the ratio of rates of the growth of labor productivity and wages:

The growth of wages is proportional to the growth of labor productivity;

The growth of wages lags behind the growth of labor productivity (the depression model);

The growth of wages leaves behind the growth of labor productivity (the progressive model).

It is possible to consider the first model ideal. On a scale of the state it does not generate inflation, and for the enterprise it contains incentives for increasing its workers’ labor productivity. In practice it is difficult to support such ratio.

The second situation should not generate inflation, but it does not contain incentives for increasing labor productivity.

If the rate of wages growth leaves behind the rate of the labor productivity growth, such model stimulates the labor productivity growth, but it generates inflation. Too high rates of the wages growth break the connection between labor inputs and payment for it that results in the decrease in labor productivity.

Thus, the competent policy in the sphere of payment allows to raise labor productivity, and, hence, the efficiency of using labor.