Base wage tend to reflect the value of the work itself and generally ignores differences in contribution attributable to individual employees.”
Changes of the base wage may be made on the basis of changes in the overall cost of living, inflation, changes in what other employers are paying for the same jobs or changes in experience/skill of employees.
“Merit pay rewards past work behaviours and accomplishments.” This form of pay is often given to the employees as increments to their base wage. We should be careful when we are talking about the rewards and returns. A return is given to the employee from employer in exchange for something of value and reward is given for meritorious performance.
Incentives also tie directly to performance. An incentive can be short term or long term and can be given to an individual employee, team of employees or even in some combination of individual, team and unit.
Employee services and benefits include alternative pay forms ranging from “vacations, services (drug counselling, financial planning) and protections (life insurance, pensions).
These four forms of pay make up total compensation package paid to employees.“


4. Differences in the base wage

In the markets everything depends on demand and supply. Why the organizations do not pay every employee in the organization same wage? Simple answer may be: “because clerk typist’s job can be done by almost everyone, but for the job of his/her supervisor we need some kind of education and also experiences are needed. 4.1 Education
Exhibit 1. Exhibit 2.


Exhibit 1. : The relationship between the level of education/experiences and population. To the higher level of education refers smaller part of population, but the basic level of education has almost everybody.

Exhibit 2. : The relations between level of education and the wage. To the higher level of education/experiences refers higher wage and on the other hand side to the lower level of education/experiences refers smaller wages. To the higher level of education/experiences refers better paid jobs than to the jobs in which low level of education/experiences is required. There are less well educated people than the people with low level of education and therefore there will be bigger demand for this kind of labour force. For example: Professor in the Comenius University can perform job of gate-keeper without bigger problems, but if we let the gate-keeper to do the professor’s job he/she will hardly knows the answers on students questions.

4.2 Degree of competition and the level of demand for the products
Both affect the organizations ability to change the prices of its product and services. ”If prices can not be changed without suffering loss of revenues due to decreased sales, then the ability of the employer to pay higher rates is constrained.

The product market factors put a lid on the maximum pay level that an employer can set.