NEW DELHI, May 7: Bonus should be used as an incentive to improve productivity, says National Productivity Council (NPC) director general SS Sharma.

While inaugurating a workshop on linking bonus with productivity and profitability jointly organised by FICCI and AIOE, Sharma said, in an economy where a number of enterprises were going sick insistence upon giving bonus at the legally minimum level is only going to add to sickness and act as a deterrent to anybody inclined to takeover the sick enterprise or make investment with a view to view to turn it around.

Sharma added that, there should be neither be any minimum or maximum limit on the bonus payable and like the Japanese system should be decided in a cooperative spirit between the management and workers. He further said that offering bonus based on productivity gains is much more superior and would be longer lasting than one based on mere sharing of profits.

Speaking on the occasion Prof Venkata Ratnam of IMI, stated that the definition of bonus was based more on semantics and practice than on law. Ratnam added, bonus should not be a substitute for base wage and no bonus scheme should seek to reduce the base salaries or wages. Bonus should however be linked to performance of either the individual, the firm or both, he added.

AIOE vice president Vineet Virmani, while speaking on the subject said, there should be no justification for fixing up bonus even though when the when the company is making losses and the company is going to be closed down. He further said, bonus should be considered as profit sharing and and not as a deferred wage.

Virmani stated that in liberal economies like US and Japan the system of linking up performance and remuneration has shown good result. India being on the threshold of the take off point has a good reason to adopt it.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.