Wages, or, as it is also called in abbreviated form, wages - this is the most important and expensive element of economic resources, as it is the main, and for many, the only source of income.
Under socialism, wages were understood to mean a certain part of the total national income, which each employee relied in monetary form for personal consumption, taking into account the law of labor distribution. This definition is not one generation "roamed" in the textbooks of political economy.
At present, in a market economy, wages are defined as the wages used by the employer, expressed in monetary terms. At the same time, the very concept of “labor” has a very broad meaning, which includes both the labor of workers, material wealth created, and the labor of workers in creative spheres, public services, etc.
Modern economic theorists distinguish real and nominal wages. The first refers to the amount of material and moral goods that can be purchased for a nominal payment, that is, it is the purchasing power of a nominal salary. Nominal wages - this is wages expressed in cash, that is, simply put, this is the amount of money that an employee earns for a certain period of working time, or for work done (it is also called piecework-bonus salary). The percentage change in real wages can be traced by assessing the difference between the percentage change in the price level and the percentage change in the nominal wage. Nominal wages correlate with real wages depending on the level of prices for services and goods. The nominal wage is not always directly proportional to the real wage. During economic crises, devaluation of the currency, often nominal wages increase, while inflation increases , resulting in higher prices for goods and services, resulting in lower real wages.
Salary is differentiated depending on various characteristics, such as country of residence, region, types of activity, individuals. Only productive labor is in demand, respectively, the higher the labor productivity , the greater the demand for it. In this case, with high demand for labor and high productivity, the average real wage also increases. In economically developed countries, the relationship between real wages per hour and output for this hour is traced. With the growth of labor productivity of a worker, his real income can also grow .
Nominal wages directly depend on the structure of the labor market. The nominal wage rate is directly proportional to the ratio of labor demand in the competitive market to its supply. The greater this difference, the employer will have to pay a large salary so that the employee rejects other offers and goes to work for him. And, accordingly, on the contrary, when exceeding job offers, the employee will be forced to agree with the terms of the employer, who, accordingly, will reduce wages in order to reduce the cost of goods or services produced, thereby increasing the profitability of production. For this reason, it is entrepreneurs who benefit from the low level of salaries.
In legal states, unions act as levers of opposition to the monopoly of employers. In order to maintain the demand for labor, they put forward various requirements: a ban on labor immigration, a reduction in working hours (weeks), restrictions on the work of minors and women (in some sectors), etc. However, these requirements do not always relate to salary increases.