Wages meaning & its types

meaning of wage, definition and its types

1. WAGES
(MEANING & ITS TYPES)
Presented by-
Dr. Jyoti Khare
Associate Professor
Govt. Degree College
Maldevta, Raipur
Dehradun

2. MEANING OF WAGES
•In economics, the price paid to labourfor its contribution to the process
of production is called wages.
•Wages are commonly understood as a price for the services of labour
or as a payment.
•wage means any monetary amount given by an employer to his
employees for their services.
•It is different from the salary which in accounting and economic terms is
paid to non-manual workers.
•Wages are the remuneration for the expenditure of effort in production
of goods & services. The efforts of wage earner may be physical,
mental or a combination of the two.

3. DEFNITIONS OF ‘WAGES’
•“Wages is the payment to labourfor its assistance to production.” -A.H.
Hansen
•Wage rate is the price paid for the use of labour.” -Mc Connell
•“A wage is price, it is the price paid by the employer to the worker on
account of labourperformed.” -J.R. Turner
•

4. TYPES OF ‘WAGES’
PIECE
WAGES
TIME
WAGES
CASH
WAGES
WAGES IN
KIND
CONTRACT
WAGES

5. PIECE RATE WAGES
•Underpiecesystemofpayment,wagesarebasedonoutputandnoton
time.
•Thereisnoconsiderationfortimetakenincompletingatask.
•Afixedrateispaidforeachunitproduced,jobcompletedoranoperation
performed.
•Workersarenotguaranteedminimumwagesunderthissystemofwage
payment.Differentpiecerateswillbedeterminedforseparatejobs.
Quantity produced = output x piece rate

6. TYPES OF PIECE RATE WAGES
1.•STRAIGHT PIECE RATE
2.•INCREASING PIECE RATE
3.•DECREASING PIECE RATE

7. ADVANTAGES OF PIECE RATE
WAGES
1.Quantity produced = output x piece rate
2.WAGES LINKS TO EFFORTS
3.BETTER UTILIZATION OF EQUIPMENT/MACHINES
4.DIFFERENTIATION BETWEEN EFFICIENT AND
INEFFICIENT
5.LESS SUPERVISION REQUIRED
6.EFFECTIVE COST CONTROL

8. DISADVANTAGES OF PIECE RATE
WAGES
1. Poor quality of goods
2. Deterioration in health:
3. Cause of dissatisfaction
4. Not suitable for beginners
5. Difficulty in fixing piece-rates
6. Opposition from unions

9. SUITABILITY
•(1) Where production quantity is more important than the quality of the
product.
•(2) When the work is of repetitive nature.
•(3) When the mass manufacturing system of production is followed and the
work is standardized suitable for continuous manufacturing.
•(4) When it is possible to measure the production output of worker
separately.
•(5) When strict supervision is not required and difficult.
•(6) When the production is dependent on human efforts.

10. TIME WAGES
•wages are paid according to the time spent by workers irrespective of his
output of work done.
•Wage is measured on the basis of unit of time, e.g., per day, per week or per
month
•The wage rates are fixed for an hour, a day, week, a month or even a year
(seldom used).
•Time Wage is based on the amount of time spent or the passage of time,
e.g., hour, day, week or month.
•It does not depend at all on the performance or the amount of output given
by the employee.
Earnings = T x R where T stands for time spent and R is rate of pay.

11. TYPES OF TIME RATE WAGES
➢(a)Flat time rate or time rate at ordinary level.
➢(b) High day rate or time rate at high wage
level.
➢(c) Measured day rate.
➢(d) Graduated time rate.
➢(e) differential time rate

12. ADVANTAGES OF TIME WAGE :
•1. Greater care and attention on quality and workmanship can be ensured.
•2. Worker knows exactly the amount he is to get.
•3. Sense of security of income regular and stable.
•4. Conducive to harmony and better labour-management relations.

13. DISADVANTAGES OF TIME WAGE
✓no close control over labourcosts.
✓no incentive for employees.
✓no encouragement for better performance.
✓unsound basis of wage payment
✓increase managerial cost due to demand of supervision.

14. CASH WAGES
•Cash wages are any pay or compensation that comes in the form of
spendable currency or other money.
•Cash wages normally make up the bulk of employment compensation for
most workers, and are generally taxable.
•Non-cash compensation may sometimes also be offered or even preferred
by employers, employees, or both, for various economic or business reasons.
•Cash wagesare compensation for employees that come in the form of
spendablemoney.Cash wagescan include actualcashcurrency, checks,
andmoneyorders.

15. Wages in kind:
When the laboureris paid in terms of goods rather than cash, is called the wage in kind.
These types of wages are popular in rural areas.
Contract wages:
Under this type, the wages are fixed in the beginning for complete work. For
instance, if a contractor is told that he will be paid Rs. 25,000 for the construction
of building, it will be termed as contract wages.
Continue ………….

16. Concepts of Wages:
The following are the two main concepts of wages:
A.Money Wages or Nominal Wages:
The total amount of money received by the labourerin the process of production is called the
money wages or nominal wages.
B. Real Wages:
Real wages mean translation of money wages into real terms or in terms of commodities and
services that money can buy. They refer to the advantages of worker’s occupation, i.e. the
amount of the necessaries, comforts and luxuries of life which the worker can command in
return for his services.
Concept of wages

17. DIFFERENCE BETWEEN REAL WAGES & MONEY
WAGES
MONEY WAGES REAL WAGES
money wages are paid in terms of the quantity
of money
whereas real w ages are paid in terms of
necessaries of life.
money w ages are expressed in terms of
money
real wages in terms of goods and services.
money wages increase, with the increase in
price level,
with the increase in price level real wages tend
to decline,

18. THANK YOU