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Determining Real Wages of Workers (13 Factors)


Some of the important factors which determine real wages of the workers are listed below:

1. Nature of Job:

Nature of job has its bearing on the real wages. We have to see whether the job is permanent or not. In some occupations, employment is seasonal as in agriculture.

Therefore, a person who has a regular job enjoys more real wages than the person who has the seasonal employment.

2. Future Prospects:


The scope for promotion and prospects of higher wages in future may induce a man to work for a low wage in the beginning.

3. Possibilities of Extra Earnings:

In some occupations there are possibilities of extra earnings. For instance, a hospital doctor may have private practice or a teacher may undertake some private tuitions to supplement his earnings.

4. Mode of Payment:

The mode of payment also influences the real wages. For example, an agricultural worker might be paid very low wages in money. But he may get other things besides money wages. These things should be taken into account while considering real wages.

5. Hours of Work:

In some jobs a person has to devote less time and in others comparatively more. This affects the real wages to a great extent.

6. Other Facilities:


The services having access to conveyance, medical, free education-to children, subsidized goods facility have more real wages, other things being the same. These facilities affect the real wages to a considerable level.

7. Price Level:

Another factor that does affect the real wages is in the shape of price level or the purchasing power of money. The rise in price level leads to a decrease in the real wages. For instance, with the ten percent increase in prices, the workers real wages go down. It is so because with the same amount of money now the workers can purchase less goods and services than before. Thus, price level affects the real wages.

8. Working Conditions:

Working conditions also prove to be a helping hand in affecting the real wage rates. For instance, the two persons get the same money wage, but their working conditions are different. The person who works in clean and healthy atmosphere will enjoy the high wages than the person working in dirty and unhealthy atmosphere. The reason is that healthy and conducive working conditions keep the expenditure on medicines at the low ebb.

9. Social Status:

The higher social status of a job leads to high real wages. For example, a clerk of govt. service and of a private company gets almost equal salary. But the social status of the clerk in government service is more than his counter partner. Therefore, he enjoys more real wages.

10. Cost of Training:


The real wages also depend on the cost and period of training. There is a negative relation between the two. If the cost and period of training is short, real wages will be more and vice versa.

11. Travel Expenses:

If a worker has to incur some travel expenses from his home to work place then his real wages will be low and vice-versa.

12. Timely Payment:

Real wages also depend on the timely payment of wages. If a worker gets his wages regularly and on fixed dates his real wages will be considered more. For instance, the real wages of government employees are considered to be high as compared to the employees of private companies.

13. Money Wages:

Other things being equal, if money wages are high, real wages will also are high. The real wages of a teacher who gets monthly income of Rs. 2000 will be more than the teacher who gets the monthly salary of Rs. 1500, because with high money wages, he can buy more. Thus, from the above analysis, we may conclude that the real wages cover the overall working conditions. The nominal wages are only the price for the services offered in terms of money.

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