Those who are paid, and those who administer payment schemes have objectives for the payment contract which differ according to whether one is the recipient or the administrator of the payments. The contract for payment will be satisfactory in so far it meets the objectives of the parties. Therefore we can consider the range of objectives, starting with employees.
First objective: Purchasing power
The absolute level of weekly or monthly earning determines the recipient's standard of living, and will therefore be the most important consideration for most employees. How much can I buy? Employees are rarely satisfied about their purchasing power, and the annual pay adjustment will do little more than reduce dissatisfaction. The two main reasons for this are inflation and rising expectations.
Second objective: "Felt fair"
The level of payment should be reasonable for the job. The employee who feels underpaid is likely to demonstrate the conventional symptoms of withdrawal from the job: looking for another, carelessness, disgruntlement, lateness, absence and the like. If he feels that he is overpaid, he may simply feel dishonest, or may seek to justify his existence in some way, like trying to look busy, that is not necessarily productive.
Third objective: Rights
This concerns a different aspect of relative income. It is linked to the notion of entitlement to a particular share of the company's profits or the nation's wealth. The employee is here thinking about whether the division of earnings is providing fair shares of the Gross National Product. “To each according to his needs' is overlaid on 'a fair day's pay...” This is a strong feature of most trade union arguments and part of the general preoccupation with individual's rights. Mainly this is the longstanding debate about who should enjoy the fruits of labour.
Fourth objective: Relativities
'How much do I (or we) get compared to... group X?' This is slightly different version of the equitable argument. It is not the question of whether the employee feels the remuneration to be reasonable in relation to the job that he does, but in relation to the jobs that other people do. There are many potential comparators, and the basis of comparison can alter. The Pay Board (1974) pointed out three. First the definition of pay. Is it basic rates or is it earnings? Over how long is the pay compared? Many groups have a level of payment that varies from one time of the year to another. Second is the method of measuring changes; absolute amount of money or percentage: £5 is 10 per cent of £50 but 5 per cent of £100. Third is the choice of pay dates. Nearly all employees receive annual adjustments to their pay, but not all at the time, and the period between settlements can be crucial.
Fifth objective: Composition
How is the pay package made up? The growing complexity and sophistication of payment arrangements raises all sorts of questions. Is £200 pay for sixty hours' work better than £140 for forty hours' work? The arithmetical answer that the rate per hour for the forty hour arrangement is better that for sixty hours is only part of the argument The other aspects will relate to the individual, his circumstances and the conventions of his working group and reference groups. Another question might be: Is £140 per week, plus a pension, better that £160 per week without? Such questions do not produce universally applicable answers because they can be quantified to such a limited extent, but some items can be suggested as generalisations:
1. Younger workers are more interested in high direct earnings at the expense of indirect benefits, like pensions and sick pay, which will be of more interest to older workers. In addition older workers will, of course, still be interested in basic pay.
2. Incentive payment arrangements are likely to interest employees who either see a reliable prospect of enhancing earnings through the ability to control their own activities, or who see the incentive scheme as an opportunity to control their personal activities (which provide little intrinsic satisfaction) away from management by regulating their earnings.
3. Married women are seldom interested in payments that depend on overtime.
4. Overtime is used by many men to produce an acceptable level of purchasing power; particularly among the lower-paid. This group will thus be less interested in benefits. Pensions and sickness payment arrangements beyond statutory minima are a sine qua non of white-collar employment, and are of growing importance in manual employment.
