Wages
Wages
In very simple words, the remuneration that is made for the service of the labour is called wages. Wage payment is essentially the price paid for the particular commodity viz labour. Berham defines wages as:
"Sum of money paid under contract by an employer to a worker for the service rendered."
Forms of Wages
Broadly speaking, wages are categorized as:
1. Normal Wages
Normal or money wages are the wages paid or received by the labour in terms of money . Money is the principle factor in normal or money wages. The wages are calculated in terms of money in this regard.
2. Real Wages
Real wages refer to the income of a worker in terms of real benefits. E.g. bonuses, holidays, transport.
In other words, the value of additional income is called real wages. It is the real wages that enable us to clear that the worker really earns.
Factors Determining Real Wages
Some of the factors that determine real wages are as follows
1. Purchasing Power of Money
The purchasing power of money has great influence on the real wages. The value of money keeps on changing constantly which varies inversely with the price level. This purchasing power of money influences the calculation how much the worker a worker earns since all the monitory calculation depends on the value of money. The places where the prices are high the real wage will be low and vice versa.
2. Subsidiary Wages
The worker earning other than regular wages have higher real wages. In order to find the real earnings of a worker, we should not only consider his salary but also the extra earning that he may be able to make. A worker may work part time and in such case his real wage will be higher as compared to the worker working only on regular wages.
3. Working Hours and Holidays
Real wages to a great extant depend upon the working hours and holidays. Obviously a worker working for more time and enjoying less holidays will have higher real wages. His income will always be higher and so will be his real wages.
4. Future Prospects
Future prospects means opportunities for the future. A businessman viewing a good prospect for his business in the future will pay higher real wages to his workers so that they can work more willingly to make best use of the opportunities of the future. However a business not having very bright prospect may even offer higher wages.
5. Nature of Work
The occupation which require great amount of skills and whose nature is quite dangerous offers high wages to the labours. The work requiring more physical and mental capabilities should offer high money and benefits to the labours.
6. Expenses
In order to calculate the real wages the expenses must also be considered. The workers incurs certain expenditures which must be deducted in order to get the final figures.
Relative Wages
Relative Wages
The concept of relative wages explains the comparison between money and real wages. It explains that only the wages of labours of different occupations employment or grades are different from each other. It tells that why some men working at the same place and at same level in different organizations receive different wages.
Causes of Differences
1. Differences in Efficiency of Labour
The labour to a great extant depends on its efficiency. This efficiency may include education, necessary skills to perform a job condition of work etc. As a general rule, the higher will be the wages and lower efficiency, lower will be the wages. It implies that more efficient workers are likely to earn higher wages as compared to inefficient once.
2. Training
Training is one of the important offers for the employees. Most of the organizations after recruiting labour provide them proper training necessary for their jobs. In this way skilled persons get a chance to groom themselves during which they receive very minimum remuneration. But as soon as they get trained they are offered respectable jobs and are absorbed easily at high wages.
3. Regularity of Work
Regularity of work has an important impact on the wages of the worker. Actually there are two categories of businesses viz: Seasonal i.e. for limited period of time and Non Seasonal i.e. for whole or unlimited period of time. Generally the labour workings in seasonal factories are often paid higher wages as compared to those working in non-seasonal ones. The simple reason behind it is that the organizations working seasonally hire the service of the labour for the limited period of time and thus pay them handsomely.
4. Degree of Trust and Responsibility
One of the major reasons of difference in the wages is the degree of trust and responsibility. As a normal course the men working at positions of high responsibility are usually highly paid. This is so because their jobs require high degree of skill; sense of responsibility and good decision-making abilities and this is what they are paid for.
5. Hours of Work
The working hours are also important in determinants of wages. The workers working for more time are paid more wages as compared to the workers working for less period of time even in the same organizations. This is why the working hours are classified as part-time or full time jobs.
6. Extra Benefits
A very interesting fact about wages is that the workers enjoying more fringe benefits are often paid low wages. Usually the wages are high in those occupations or business where such benefits are not offered. For example in a factory a worker may be earning RS 1,800 but he may be getting medical allowance, housing allowance, old age pension, bonuses etc
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