The solution to the problem of increasing labor productivity largely depends on the material interest of the employees of the enterprise, which is reduced to an increase in their incomes. A special, central role in the structure of an employee’s income belongs to wages. Both now and in the coming years, it remains the main source of income for the vast majority of workers, which means that wages in the future will be the most powerful incentive for improving the results of labor and production as a whole.
Wages have legal and economic aspects. The legal concept of wages is given in article 57 of the Labor Code of the Republic of Belarus. According to this article, “wages are a set of remuneration calculated in monetary units and (and) in kind, which the employer is obliged to pay to the employee for the work actually performed, as well as for the periods included in working hours.”
As a socio-economic category, wages need to be considered in terms of their role and significance for both the employee and the employer. For an employee, wages are the main and main item of his personal income, a means of reproducing and improving the welfare of himself and his family, and hence the stimulating role of wages in the results of labor to increase the amount of remuneration received. For the employer, the wages of employees are the funds they spend on the use of hired labor, which is one of the main items of expenditure in the cost of production goods and services. At the same time, the employer is naturally interested in a possible reduction in unit labor costs per unit of output, although at the same time it may be advisable to increase labor costs in order to improve its quality level, if this will increase the profit of the enterprise by stimulating the labor and creative initiative of employees. In addition, the level of remuneration has a tangible impact on the behavior of both the employee and the employer, which is formed in connection with the regulation of relations between them in conditions of non-equilibrium demand and supply of labor in the labor market.
In the economic literature, there are different approaches to determining the economic essence of wages. From the point of view of wages, as the main form of distribution by labor, it appears as the personal labor income of the employee, determined by the quantity and quality of labor.
The amount of labor is its duration within the normal intensity of labor. Such intensity, on the one hand, provides the necessary equality of expenditure and accumulation of vital energy, and on the other hand, satisfies the natural human need for a certain amount of labor.
The intensity of labor means not just the expenditure of energy, but its productive costs, expressed in a certain amount of goods produced. A more intense workday is embodied in more foods than an intense day of the same duration. This naturally affects the amount of remuneration for work.
The use of only a quantitative assessment of labor is not enough because of its qualitative heterogeneity.
The quality of labor is a set of properties that give certainty and integrity to this work. The main components of the quality of work are its complexity, conditions and responsibility.
There is a view of wages as a monetary expression of the value or price of labor power. The cost of labor is essentially the cost of the means of subsistence necessary for the reproduction of labor power. It includes, firstly, the cost of funds that meet the needs of the employee himself; secondly, the cost of the funds necessary to support the employee’s family; thirdly, the cost of training facilities. The cost of labor is influenced by the historical and national characteristics of a particular country, as well as climatic conditions.
The real dynamics of labor costs is formed as a result of two opposing trends: on the one hand, the expansion of socially normal needs of workers in goods, services, education and skills; on the other hand, the growth of social labor productivity. The first trend causes an increase in the cost of labor, the second – its decrease.
Since wages are paid mainly in cash, changes in the prices of consumer goods and services, tax rates can change its real content. In this regard, a distinction is made between nominal and real wages. Nominal (or monetary) wages are the amount of money an employee receives for the work performed. Real wages are determined by the amount of goods and services that can be purchased for nominal wages. The value of real wages depends on a number of factors. First, it is the amount of nominal wages. Secondly, its value is affected by the level of prices for consumer goods and services. If the monetary payment remains unchanged and prices rise, then this is tantamount to a decrease in wages. If prices go down, it means higher wages. Thirdly, the value of real wages depends on the availability in stores of a sufficient number of goods corresponding to the demand of the population. If the price does not change, but there are no goods, then the deficit is also tantamount to a decrease in wages. Fourthly, the minimum wage should not be lower than the level of the physiological subsistence minimum.
In a market economy, wages perform stimulating, reproductive and regulatory functions.
The stimulating purpose of wages is to create a material interest in individual and collective labor results, increasing the efficiency of production of goods and services, and improving the quality of work.
The reproductive function determines the absolute level of remuneration necessary to meet the vital needs of the employee and his family.
The regulatory purpose of wages is its impact on the ratio between demand and supply of labor, on the formation of personnel, the number of employees and the level of their employment.
The most important task of the enterprise in modern conditions is to strengthen the stimulating function of wages.
The possibility of achieving a high level of the stimulating role of wages is justified, first of all, by the fact that in the structure of incomes of workers and their families it constitutes, as already noted, the predominant part of income in comparison with other sources. Since it is wages that are related to directly expended labor, its stimulating effect on the development of social production is decisive. Skillful use of this function turns wages into one of the most important levers for increasing the efficiency of production and economic growth.
Among the variety of factors for increasing the stimulating role of wages, internal factors, that is, the organization of wages, are of dominant importance. All activities of the enterprise in the field of remuneration are carried out on the basis of scientifically based principles. Among the most characteristic principles of payroll organization are:
differentiation of wages depending on the qualifications of employees and working conditions; independence of enterprises in matters of organization and remuneration of labor; compliance of the level of wages with real labor results; constant growth of nominal wages; material interest of employees in achieving high final results of labor; minimum wage guarantees; ensuring outstripping growth rates of labor productivity in comparison with the rate of wage increases; financial responsibility for the performance of labor duties.
The mechanism of wage regulation in the conditions of market relations should be based on a combination of state and contractual regulation. One of the main tasks of state regulation is to establish a minimum wage and a tariff rate of the first category. Contractual regulation of wages includes the application of general, sectoral (tariff) agreements, collective and labor contracts.
Market regulation of wages presupposes the existence of an adequate mechanism, one of the important links of which is market self-adjustment, which is carried out under the influence of a changing ratio of supply and demand in the labor market. The law of supply and demand in a market economy has a decisive influence on the level and dynamics of wages. To regulate the efficient operation of the enterprise, it is important to regulate wages taking into account supply and demand in the labor market. The formation of wages on the basis of the price of labor, acting as an important factor in the development of the country’s economy, will create a more effective system of incentives for workers.