What are the various factors determining wages and salary?

Productivity is the key factor in the operations of a company. High wages and low costs are possible only when productivity increases appreciably. The above factors exercise a kind of general influence on wage rates. In addition, there are several factors which do affect the individual difference in wage rates.

What is determinate factor of real wage?

The real wage is said to be high when a laborer obtains larger quantity of goods and services with his money income. ADVERTISEMENTS: Purchasing power or value of money determines the real wage. If the purchasing power of money is high purchasing power of money depends on price level.

Is used in determining real wages?

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. Thus, price level affects the real wages.

What is the formula for calculating real wages?

It is defined as the nominal wage divided by the general price level: real wage = nominal wage price level . real minimum wage = nominal minimum wage price level . The conversion from nominal wages to real wages is an example of the more general idea of correcting for inflation.

What are the factors that affect the determination of wages?

Following are the factors which affect the determination of wages: 1. Supply and demand of labour; 2. The organisation’s ability to pay; 3. The prevailing market rate; 4.

How is real wage determined by money wage?

Real wage is determined not only by the money wage but also by so many other factors. 1. Level of Money Wage: Other things remaining the same, higher the money wage rate, higher will be the real wage.

How is the wage and salary structure of workers determined?

As stated earlier, the wage is a price for the services rendered by a worker or employee. The firm desires these services, and it must pay a price that will bring forth the supply, which is controlled by the individual worker or by a group of workers acting together through their unions.

When do demand and supply forces determine wage rates?

The labour market conditions or demand and supply forces to operate at the national and local levels and determine the wage rates. When the demand for a particular type of skilled labour is more and supply is less than the wages will be more.