Class XI, Principles of Economics, "Causes of Differences (Wages)"

Causes of Differences

1. Differences in Efficiency of Labour
The labour to a great extant depends on its efficiency. This efficiency may include education, necessary skills to perform a job condition of work etc. As a general rule, the higher will be the wages and lower efficiency, lower will be the wages. It implies that more efficient workers are likely to earn higher wages as compared to inefficient once.
2. Training
Training is one of the important offers for the employees. Most of the organizations after recruiting labour provide them proper training necessary for their jobs. In this way skilled persons get a chance to groom themselves during which they receive very minimum remuneration. But as soon as they get trained they are offered respectable jobs and are absorbed easily at high wages.
3. Regularity of Work
Regularity of work has an important impact on the wages of the worker. Actually there are two categories of businesses viz: Seasonal i.e. for limited period of time and Non Seasonal i.e. for whole or unlimited period of time. Generally the labour workings in seasonal factories are often paid higher wages as compared to those working in non-seasonal ones. The simple reason behind it is that the organizations working seasonally hire the service of the labour for the limited period of time and thus pay them handsomely.
4. Degree of Trust and Responsibility
One of the major reasons of difference in the wages is the degree of trust and responsibility. As a normal course the men working at positions of high responsibility are usually highly paid. This is so because their jobs require high degree of skill; sense of responsibility and good decision-making abilities and this is what they are paid for.
5. Hours of Work
The working hours are also important in determinants of wages. The workers working for more time are paid more wages as compared to the workers working for less period of time even in the same organizations. This is why the working hours are classified as part-time or full time jobs.
6. Extra Benefits
A very interesting fact about wages is that the workers enjoying more fringe benefits are often paid low wages. Usually the wages are high in those occupations or business where such benefits are not offered. For example in a factory a worker may be earning RS 1,800 but he may be getting medical allowance, housing allowance, old age pension, bonuses etc