Factors affecting wage determination

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Factors affecting wage determination

Factors That Affect Wage Levels and Wage Determination under Pure Competition Most people work to earn a living, which they do by supplying their labor in return for money.

Laborers consist of unskilled workers, blue and white collar workers, professional people, and small business owners. Wages are the price that workers receive for their labor in the form of salaries, bonuses, royalties, commissions, and fringe benefits, such as paid vacations, health insuranceand pensions.

The wage rate is the price per unit of labor. Most commonly, workers are paid by the hour.

Factors affecting wage determination

Nominal wage is the amount earned in terms of dollars or other currency, while the real wage is the amount earned in terms of what it can actually buy. If the nominal wage does not increase as much as the inflation rate, then real wages decline.

Wage Levels Wages differ among nations, regions, occupations, and individuals. Generally, wages will be higher where the demand for labor is greater than the supply. Nominal wages vary more than real wages, since the purchasing power of different currencies varies considerably.

For instance, in countries with low-priced labor, such as China and India, household goods and services have lower prices than in more advanced economies.

Factors That Influence Minimum Wage Rate | Economics Help

The main factor that determines the upper limits of wages is the productivity of the business in combining inputs to produce socially desirable outputs. Obviously, more productive workers can be paid more. Productivity largely depends on the availability of real capital, in the form of machinery and automation, and on the availability of natural resourceswhich are required as inputs in the production of products and services.

The amount of education or training also largely determines how much a worker can earn, not only by making the worker more productive, but by also making the worker more desirable to employers, who compete for workers through the level of wages that they offer.

If the time required for training or education is long, then it must lead to higher paying jobs; otherwise, people would pursue easier work or work that can be attained in less time, if there was no difference in pay. The quality of the entrepreneurs who start a business will also determine the efficiency of the business since they lay down the initial organization of how the business will be conducted to produce its output from its various inputs.

Afterwards, the quality of the management will affect the efficiency of the business, and therefore, the workers, by how effectively they control costs and produce the desired output. Another factor affecting productivity is the political and social environment of the country or region in which the business is located.

Many governments, especially in corrupt countriesinterfere with the development of businesses or try to extract payments, in the form of bribes, from businesses for the enrichment of particular people in the government rather than using it as tax revenue for the benefit of society.

In the same way that mismanagement can reduce the efficiency of workers in a business, the mismanagement of a country can likewise reduce the efficacy of its people. For instance, after Saudi Arabia, Iran and Venezuela have the largest oil reserves in the world, and yet, the people live in poverty.

Russia, the largest country in the world by far and rich in natural resources, has a lower GDP than little South Korea, even though Russia has almost 3 times the population.Most units give greater weight to two wage criteria, viz., job requirements and the prevailing rates of wages in the labor market.

Factors Affecting Wage Determination. Methods of Wage Determination in India 1. Fixation of wages is a recent phenomenon in India 2. There was no effective machinery until 2nd world war for settlement of disputes for fixation of wages. 3. After. Legislative factors are important in wage determination in that they set out minimum standards, especially minimum wages and conditions. This may be a prime factor used by some firms who rely on low skill, low pay (minimum), and transient workers. These four factors are considered beyond normal requirements and per each additional requirement can increase the wage level. In some instances if the occupation does require a special license, it will not affect the wage level.

Other factors, such as changes in the cost of living, the supply and demand of labor, and the ability to pay are accorded a secondary importance. Economics Wages: Factors That Affect Wage Levels and Wage Determination under Pure Competition.

Most people work to earn a living, which they do by supplying their labor in return for money. factors affecting wage and salary structure. employers do not generally favor using the concept of a living wage as a guide to wage determination because they prefer to base the wages of an employee on his contribution rather than on his need.

Also, they feel that the level of living prescribed in a worker’s budget is open to argument. Factors affecting wages & salaries 1. RAJESH KAVATHEKAR MBA-I SEM-II ROLL NO 2. According to D.

7 Factors to Consider for Determining Wage and Salary Structure of Workers

C. Beach, “Wage and salary administration implies the establishment and implementation of sound policies and principles of employee compensation”. A list and explanation of factors that cause wage inequality. Including skills, MRP, discrimination, unionisation, monopsony and regional differences.

Factors that explain wage inequality. One theory of wage determination suggests that some workers have ‘insider’ privilege and some workers, considered ‘outsiders’ have less. Real Wage: 10 factors that determines real timberdesignmag.com wage refers to the purchasing power or buying capacity of money wage.

It is the amount of necessaries, comforts, and luxuries which the worker can command in return for his remuneration.

Factors That Determine Wages | Pocket Sense