Essence of wages

According to statistics, 95% of Russians consider their main source of income to be wages. Following her, there are such ways of making a profit, like securities, deposits and so on. Consequently, the essence of wages can be understood as a reward for work and motivation for further career development. This is one of the most effective incentives for improving and improving productivity.

Wages can be represented as a monetary compensation for the time spent on labor and the employee's forces. How is the amount of this compensation determined? The answer to this question can not be unambiguous. It is generally believed that the employer must pay the employee a sum of money, which is enough to meet life needs. It is worth remembering that the basic set of consumer goods and services varies depending on the country and the specific stage of the historical development of society. So, the essence of wages is the creation of favorable conditions for the life of all citizens of the country.

How are cash awards distributed? Typically, the level of income depends on the quality and quantity of human labor, as well as on the final results of the enterprise. In order to understand the essence of wages, you need to know some definitions. The cost of labor is a category of labor force, formed on the basis of the supply-demand ratio. Wages are a category of productivity. It is formed not only according to the market value of labor, but also taking into account such factors as the complexity, conditions and social significance of the work.

Considering the essence of wages, it is worthwhile to clarify that the process of work itself has no value. Cash compensation comes from performance results. There is a so-called nominal wage. This term refers to the amount of money received in a particular time period (hour, day, month). Real wages are the amount of various goods that can be purchased for a nominal cash consideration. That is, it is the purchasing power of the money received.

So, we have considered such concepts as the essence and functions of wages. Now let's try to understand how monetary compensation for labor activity is formed. The level of wages is directly proportional to the supply-demand ratio. The employer must provide the specialist with this amount of money, so that he rejects all other employment options. However, if the demand in a particular industry exceeds supply, the person has no choice, and he agrees to any proposed salary.

There are two main forms of monetary compensation for work. The time salary is an option in which the employer pays for the time worked by the employee. A more modern form is piecework monetary compensation for work. That is, wages are paid on the basis of performance results. The second form is gaining popularity, because compared to the first, it has a lot of advantages. In particular, this is a powerful motivation for the employee to improve his work and productivity, which positively affects the well-being of the enterprise as a whole.

Let's sum up. The economic essence of wages consists in supplying citizens with necessary vital goods, which are formed on the basis of specific conditions and are distributed depending on the results of labor activity, as well as many other parameters, for example, the supply-demand ratio for labor.