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Factor Determining Real Wages || Concept of Wages || +2

Factor Determining Real Wages

Factor Determining Real Wages

Factor Determining Real Wages can be explained by the following points.

  •  Price level
  •  Extra facilities
  • Nature of work, regularity &security of work
  • Extra earnings
  • Environment conditions of work
  •  Career and promotion prospects
  •  Social status
  •  Timely payment
  •  Employment provision for family members

Real wages not only depend on the number of goods and services that the money wages are able to purchase but also depend upon no other factors.

Price level

The price level is an important factor affecting the real wages .there is an inverse relationship between real wages &price level. Keeping all the other things instant with an increase in the price level the real wages will fall &rice versa. This is possible because consumers can purchase more goods at lower wages.

 Extra facilities

Real wages depend on extra facilities which the job carries with it. A worker may be getting extra facilities like free medical attendance free education to his children subsidized goods etc. besides his salary. Such facilities increase the real wages of a worker.

Nature of work, regularity &security of work

If the work is risky, injurious to health & temporary it will tend to lower real wages.

Extra earnings

If there is a possibility of earning extra income, the real wages will be high. For example, a lecturer doing tuitions or writing books is having an extra source of income. Therefore his real wages will be high on the other hand, if a person is having no extra earning his real wages will below.

 Environment conditions of work

The real wages also depend upon the working condition of the worker for example if the office of one worker is air-conditioned having a good atmosphere and that of the other is non-equipped with even fan, real wages of the first will be more than that of the second.

 Career and promotion prospects

If their chance of promotion or career advantages of worker is more than his real wages will be high for example a worker working in a bank has better prospects of promotion but a labourer working in a factory has very little or min future prospects. Then the real wages of the worker in a bank are high in comparison to the factory worker.

 Social status

Real wages also depend on social status for the job the higher social status of a job leads to higher real wages. Suppose the money wages of a factory manager &CDO are equal but real wages of CDO one more to social status.

 Timely payment

The timely payment also affects the real wages of the workers, as a matter of fact, the timely payment of salary increase the real for example the real wages of the govt.  employers are considered high in comparison to the workers of the private sector since the govt. workers are paid their salary timely on the fixed date.

 Employment provision for family members

The real wages of a worker also depend upon the employment provision for the family members of pref. Employment is given to the family members such as wife, son, daughter, etc. then the real wages will be high.

If you liked our content Factor Determining Real Wages, then please don’t forget to check our other content Modern Physics

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