The amounts of products and services that can be purchased with money wages are referred to as real wages. The term “real wages” refers to the conversion of monetary wages into real terms. Nominal wages refer to the sums in the wage earners’ pay envelopes, whereas real wages refer to the amount of purchasing power received. Factors Affecting Real Wages are discussed below:
Factors Affecting Real Wages
The following elements influence a laborer’s real wages:
- Money Wages – Wages in Money If all other factors remain constant, the greater the money wage rate, the higher the real wage rate. Real wages tend to rise in lockstep with money wages.
- Price Level- The price level, or the purchasing power of money, has a significant impact on real earnings. When the general price level rises, the purchasing power of money falls, resulting in a decrease in real wages, and vice versa.
- Job Nature-Some activities are dangerous, while others are exhausting, such as piloting or mining. Some occupations are very exhausting (such as blacksmithing) and lower the laborer’s working life, while others are dangerous (such as lead working) and shorten the earning duration. Then there are certain vocations that are filthy and despised, such as sweeping or butchering.
- Supplementary Earnings: —Real wages are also affected by the availability of additional sources of income. In a five-star hotel, a porter has the possibility to augment his pay. with the help of consumer suggestions A college peon does not have this option. The real wage of the whole bearer is higher. Similarly, teachers might supplement their income by answering books, establishing question papers, tuition fees, writing books, and so on.
- Working Hours— The number of hours worked and holidays are taken to have an impact on real wages. We can compare a bank manager who has to go to his bank at 9.00 a.m. and returns at 6.00 p.m. with someone who has to go to his bank at 9.00 a.m. and returns at 6.00 p.m. With a college lecturer who only has a few periods per day, he gets a lot of vacation time. As a result, the professor’s real salaries are higher than the manager’s. So, Working Hours is one of the important Factors Affecting Real Wages.
- Training Costs—Some professionals, such as technicians, computer scientists, and doctors, invest a significant amount of money and time in their education. As a result, we must subtract the cost of their training from their money wages when calculating their real wages.
- Working Conditions—A laborer’s real pay is influenced by the conditions in which he or she works. A laborer who works in a clean and healthy environment will earn more money than one who works in a dirty and unhealthy setting.
- Other Facilities—If a person works in a profession, they are provided with a variety of other benefits. Medical and Housing Benefits, Provident Fund, Gratuity, Pension, and Bonuses are all examples of monetary earnings. The real earnings are higher in LTC.
- Chances of Success—The chance of earning higher salaries in the future has an impact on real wages.
- Job Character—a laborer’s real wages are also determined by the job’s nature. It denotes whether the laborer is employed on a regular basis or on a part-time basis. In the event of regular and permanent employment, real earnings will be higher, whereas, in the case of ad-hoc and temporary employment, real pay will be lower.
- Social Status—Ahead clerk in a good office and a police sub-inspector may earn the same amount of money, but a sub-inspector has a better social status than a head clerk. As a result, genuine, The salary of a sub-inspector will be higher.
- Possibilities for Future Promotion—Money salaries in a given career may be low at first, but they will rise over time. It’s possible that you’ll be promoted in the future. These jobs pay more in real terms.
- Employment of Dependents—Wardens and dependents of individuals serving in the army, railways, banks, and other government agencies are given priority when applying for jobs. As a result, they have more economic security. Adult boys can easily obtain jobs in some industrial areas, although such assistance is not available in other areas. As a result, actual earnings for workers in previous types of firms will be higher.
- Professional Expenses—In order to carry on one’s profession, one must incur some expenses from time to time. For example, a college professor must hire a vehicle and spend money on books and publications in order to attend classes. Similarly, a lawyer must have a conveyance, keep a clerk, and pay dues to the attorneys association. To accurately calculate real earnings, all such expenses must be deducted from wages.
The above Factors Affecting Real Wages.
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