What Factors Affect Remuneration Rates?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 06 January 2020
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Also known as compensation or pay rates, remuneration rates have to do with the compensation that is received in exchange for providing some type of resource to an employer or buyer. Rates of remuneration or pay are impacted by a number of different factors, including governmental regulations, the cost of living in a given area, and the degree of skill and expertise associated with the tasks that are associated with the position in question. Just about every employer sets wages and salaries by using some type of standard plan of remuneration rates as the basis for compensating employees.

One of the key factors that exerts some influence on remuneration rates is the level of skill, experience, and expertise required in order to successfully fill a job position. For positions that are considered non-skilled, the scale of rates available are somewhat lower than for positions that are considered semi-skilled or skilled. This can lead to several different classes of hourly rates that apply to essential jobs ranging from the janitorial team all the way through to machine operators and clerical employees. Even within the scope of salaried employees, specific remuneration rates will apply to the salary and benefits associated not only with each position, but the wealth of experience and expertise that the employee brings to that position.


In many areas, government regulations regarding minimum wage requirements will also have an effect on remuneration rates. For hourly employees, this usually translates into setting the lowest rate per hour that an employer can pay and still be in compliance with those regulations. With these positions, the hourly wage may constitute the entire compensation package, with no additional forms of remuneration available. At other times, there may be some sort of bonus program in place that qualified employees can participate in, helping to increase the amount of compensation they can possibly make each pay period.

The cost of living in a given area can also exert some impact on remuneration rates. When the cost of essentials such as food, clothing, and shelter are lower, employers will normally set rates for hourly and salaried positions accordingly. In areas where the cost of living is higher, pay rates and other incentives will also be adjusted to allow employees the chance to earn a relatively equitable living. The remuneration rates are adjusted from time to time as the cost of living increases, usually with what is known as a cost of living raise or wage increase. Only during extremely difficult economic periods do employers seek to decrease wages and salary in order to keep the company in operation.



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