The policy of incomes and payment for labor

 

 

                      Content

Introduction…………………………………………………………………..…….3

1. Income, sources of their formation and the life level

1.1. The cost of labor force and its structure ……………………….……….5

1.2. The price of labor force…………………………………………………7

1.3. Income of population and sources of their formation………………..…8

1.4. The concept and indicators of living standards………………………18

2. The base of payment of work

2.1. Wage……………………………………………………………….…22

2.2. Minimum wage………………………………………………………26

          2.3. State regulation of wage……………………………………………….27

3. Tariff system and its purpose
1. Tariff rate of employee……………………………………………..29
2. Rate networks, their role in the wage………………………………30
3. Directory of professional qualification of workers and its

application…………………………………………………………………32

4. Bonuses and allowances…………………………………………….40
4. Systems and forms of payment of work in agrarian sector…..……………42

     Conclusion………………………………………………………………….46

     Literature…………………………………………………………………..48

 

                   Introduction

     The human by his nature is essence social. He lives among the other people, creating to himself and his close people more suitable conditions of existence. So is formed world of the economy. The history of the development mankind - a history of the development of the economic relations, including the field of public division of labor. "All belongings to labor" - said Ekklesiast. Not accidentally exactly about labor most amount proverbs formed beside folk of the world and sayings, reflecting culture, traditions and experience. Not accidentally relations of the labor have found entailment in many classical masterpieces.

     The economy of the labor as science studies the economic regularities in the field of labor relations, including specific forms of the manifestation to essence of the labor, such, as employment, organization, payment, efficiency and others. Economy of the labor, being economic science, explains the processes of the agreements and coordination in society. The knowledge of the basis of economy of the labor will allow the specialist abstracted and argumentically approach of study occurring event, explain their driving power and value importance.

     The topic of my course paper is the policy of incomes and payment for labor. 

     The policy of income in Ukraine is directed on providing the welfare of population, the constant increasing of the life level. The level of life is one of the most important indicators, that are characterized the achievement of nation, its status in the world rating.

     Incomes play the important role in the life of people as the main source of needs (interest) satisfaction. The policy of incomes is a part of social policy (or issue of internal policy of the country) and directed to the regulation of relationships in society in the income sphere of different social groups of population and for systematic support o the some level of welfare. Policy of income as a social policy in whole closely connected with concrete historical stage of country development and depends from the state of economy and relations that are formed in it.

     In other words the base of population life is the presence of good job and worthy wage, the possibility of using of guaranteed qualitative services.

     The main aim of my course work is the theoretical research of the question “income” and particularities of income forming of population.

     This aim stipulated the necessity of studying such questions:

1. Income and sources of their formation and life level
2. The base of payment of work
3. Tariff system
4. Systems and forms of payment of work in agrarian sector

     The subject of course paper is the research of the particularities of income forming in market economy, the methods, systems and forms of payment for labor.

 

1. Income, sources of their formation and the life level

     1.1.The cost of labor and its structure

     One of the important elements of a market economic system - hired employment. Labor force of employees in the labor market is a commodity that has value.

     Cost of labor force is a set of business expenses related to labor and its reproduction. It is the volume of goods necessary to ensure the normal life of human, ie to maintain its efficiency, vocational qualification training, maintenance of family and parenting, spiritual development, etc.

     At the cost of labor also affect the results of the owner of the working labor force. The cost of labor in the market forms through a comparison of performance, utility of work with the costs of reproduction of labor. It is established at a level that coordinates marginal productivity, ie the value of labor services for the consumer-entrepreneur with expenses needed for the reproduction of labor.

     On the value of labor costs affect certain factors. Some increase it, others – reduce.

     By the factors that increase the cost of labor is:

• expanding needs for new goods and services depending on the economic development of society;
•   increasing spending on housing, transportation costs;
•   Increasing the intensity of labor of employees, increasing the psychological pressure, which requires increasingly vital funds spent to restore the physical, moral and nerve force.

     Reducing the cost of living means, that are  necessary to reproduce labor predetermined by increasing productivity of labor and impact on reducing labor costs.

     The experience of countries with developed market economies shows that the cost of labor tends to increase. This is because the growth rate of labor costs through inclusion the cost of new goods and services significantly higher than the rate of decline by reducing the cost of consumption under the influence of increasing productivity.

     The structure of labor costs includes:

• directly to wages (salary rate, salary, bonus payments, allowances and bonuses);
• natural benefits (food, housing expenses, etc.) provided to employees entrepreneurs;
• costs of employers to social insurance. Statutory contributions to social security (old age due to disability, sickness, maternity, industrial injury, unemployment and in the form of family assistance). Voluntary or contractual (based on collective agreements) to the system of social security and private insurance.
• direct payments to workers in the absence from work through illness, accident, etc.. Cost of medical and sanitary services. Output support (payment at the end of the term of employment contract);
• the costs of training and staff, professional orientation and selection of staff;
• the costs of welfare services (canteens and other establishments catering to the business, cultural services and similar services);
• taxes, which are considered as costs for labor (for payroll, revenue).

     Cumulative life means which are necessary to reproduce the labor force in monetary terms, determines the price of labor.

     Depending on the state of the labor market price of labor force may deviate from its value. 
 
 
 
 

     1.2.The price of labor force

     The price of labor force above all depends on market labor supply and demand of labor. Conjuncture can vary, causing a corresponding fluctuation in price.

     Now the demand for labor in countries with market economies are less of its proposal, ie there is always unemployment. In this regard, even during the current business conditions the presence of unemployed restraint requirements of employed workers to improve conditions for the sale of their services. At a time when unemployment in developed countries has become chronic, the law of supply and demand actually works in the presence of constant excess of supply over demand of labor. This excess also varies depending on the business cycle situation.

     The price of labor is regulated and controlled by the state and trade unions. A certain laws, labor (tariff) agreements and other trade unions and employers are created. In general agreement states a minimum price of labor, which allows normal existence. In connection with changes of living conditions, work, production.

     The quality of labor force also affects on its price. The higher the educational level of the employee, the higher quality of labor, and hence the price tag.

                         
 
 
 
 
 
 
 
 
 

     1.3. Income and sources of their formation

     Cost of labor is a basis for all of the system of public work.

     Income policy, that realized by society, is an important component of overall socio-economic policies, as indicators of income are the characteristics of life and economic characteristics at the same time.

     Income of population – an instrument for determining of the welfare level of society. Market economy, directing the population to improve their welfare, primarily due to labor activity, initiative and entrepreneurship, along with maintaining of the social unprotected groups, needs government guarantees to ensure consumption for all citizens.

     Income - a combination of funds and expenditure in physical terms for the maintenance of physical, moral, economic and intellectual conditions, which are necessary for human.

     There are money and natural income. Formation of income is through payment of workers, payment of social funds (social transfers), business income, income from property, income from personal subsidiary farms and self-employment, other income (alimony, fees, charity, etc.)

     Payment of labor - a reward for the work and  also vacation pay, holidays and other no worked  time, according to labor laws and collective agreements. In addition to this revenue include stimulating bonuses and extra charges, bonuses and one-time incentive payments, compensation payments related to working hours and working conditions, etc.. Wage rate, regularity of payment most determines to the level of living, especially the parts with low incomes. Timely of payment of wages - one of the most important factors of socio-political situation in Ukraine. (table 1.1)

                                        Table 1.1.

The structure of Ukrainian population income (1992-2001), % 

     To social transfers include pensions, social assistance, scholarships, insurance compensation, reimbursement disabled, damages repressed citizens.

     This income is formed by part of the profit that remains to the entrepreneur after the payment of interest on the loan and is fully dependent on the efficiency of management.

     The level of income and wages of persons hired labor, associated with small businesses, higher than in the average one for the national economy or industry.

     NGOs, especially small and medium ones,  operate in the market, providing employment of citizens without the financial participation of the state. But there are some problems associated with the formation of income, wages, development of social and labor relations.

     Particularities of income of persons employed by individual work and small business are:

• instability of income, as this business is going at own risk;
• some  part of profits is used for personal consumption, some can be used for investment and expansion of business, if there is a possibility of selling products or services rendered;
• often no social protection (not paid by medical certificate, holidays, there isn’t often execution to work, no deductions are made to off-budget funds);
• Problems of working conditions, its intensity resolved, usually without regard to current norms.

     Income from the property includes:

• interest on deposits by investors of credit institutions, the State of Ukraine and External-economic Bank;
• payment of income for government and others securities by the State Bank and credit institutions;
• advance compensation for deposits of citizens;
• income from the sale of property on the secondary housing market.

     Further development of revenues from the acquisition of means of production into private ownership and management of individual work.

     In the modern conditions in our country there is an additional source of income of workers employed in social production, it is - a profit. With net profits realized the following types of income as income from investments, innovation, dividends, profits of monopolies, social payments and other benefits.

     Distinguish nominal and real incomes.

     Nominal incomes - is the counted value of payments and in kind. Real income - is nominal income, adjusted for price changes and tariffs for services. The consumer price index affects the purchasing power of nominal income of population:

        p_r=p_n/I_p            (1.1)

     Where p  - is real income

                 P   -  is nominal income

                 I  - is consumer price index.

     Nominal and real incomes, also the size and dynamics of the main income of certain population groups, such as salaries, pensions and scholarships, and provide first notion about level of life.

     For the characteristic of population welfare, total income has a great importance of total population, families, separate individual, growth of what in conditions of constant prices and taxes (or their smaller increase compared with the increase of income) shows of  improvement opportunities of satisfied needs.

     Total income includes all types of monetary incomes and the cost of natural income received from personal subsidiary economy and used for personal (household) consumption. In addition, the total revenue includes the cost of free services that are received from the state costs and local budgets and funds of enterprises (health services, education, subsidized housing, transportation, meals, etc.)