Flexible wage systems in newly industrialized countries

Flexible wage systems, in which employers have some discretionary power in setting salaries and wages, are especially effective when economic conditions are uncertain, and can enhance the international competitiveness of companies in newly industrialized countries. Creating a flexible wage system is a detailed process, and its implementation requires extensive groundwork. Principles and guidelines for formulating flexible wage systems at the company level are presented, and examples of systems, drawn from different sectors of newly industrialized countries, are cited. Flexible wage systems based on both a profit-sharing model and a variable productivity payment model have basic wage components that reflect the value of jobs, and consider the company's performance and productivity, as well as individual performance, in disbursing payments.