Wages are the biggest incentive for employees to perform their jobs sincerely and error free. Several wage systems have been devised for fulfilling the requirements of both employees and employers.

Thus, the wage system should be planned carefully. A system that reduces the labour cost per unit while increasing the output and giving a fair return to workers will be the most suitable one. The aim of the wage system should be the introduction of a fair wage. A good wage system should possess the following characteristics:

(i) Simplicity: The wage system should be easy to understand and simple to operate. A complex system may lead to strikes and agitations and may be a hindrance to a harmonious employer-employee relationship.

(ii) Fair to Employer and Employee: The system should be satisfactory from the point of view of both employer and employees.

(iii) Guaranteed minimum wage: The system should guarantee a minimum wage to every worker irrespective of the work done by them.

(iv) Incentive to work: Adequate incentives should be provided to the workers to work hard with great care. Efficient workers should be able to earn more wages as compared to the inefficient workers.

(v) Quality output: The system should encourage the workers not only to increase the quantity of output but also to improve the quality of output.

(vi) Certainty: There shouldn't be any ambiguity in the wage distribution.

(vii) Conformity with local and national labour laws: The system should to conformity with various labour laws and regulations both local and national.

(viii) Minimization of labour turnover: The system should minimize la turnover, absenteeism and late attendance.

(ix) Adjustment to price changes: The system should invariably contain provision for automatic rise in wages as cost of living index increases.

(x) Flexibility: The system should incorporate flexibility to adjust with changing circumstances of the business.