Wages:

 The price paid to labour for its contribution to the process of production is called wages. Labour is an important factor of production. If there is no labour to work, all other factors, be it land or capital, will remain idle.

Types of Wages:

1. Piece Wages: Piece wages are the wages paid according to the work done by the worker. To calculate the piece wages, the number of units produced by the worker is taken into consideration.

2. Time Wages: If the labourer is paid for his services according to time, it is called as time wages. For example, if the labour is paid Rs. 35 per day, it will be termed as time wage.

3. Cash Wages: Cash wages refer to the wages paid to the labour in terms of money. The salary paid to a worker is an instance of cash wages.

4. Wages in Kind: When the labourer is paid in terms of goods rather than cash, is called the wage in kind. These types of wages are popular in rural areas.

5. Contract Wages: Under this type, the wages are fixed in the beginning for complete work. For instance, if a contractor is told that he will be paid Rs. 25,000 for the construction of the building, it will be termed as contract wages.

Concepts of Wages:

A. Money Wages or Nominal Wages: The total amount of money received by the labourer in the process of production is called the money wages or nominal wages.

B. Real Wages: Real wages mean the translation of money wages into real terms or in terms of commodities and services that money can buy. They refer to the advantages of worker’s occupation, i.e. the amount of the necessaries, comforts and luxuries of life which the worker can command in return for his services. An example will make things clear. Suppose ‘A’ receives Rs. 500 p.m. as money wages during the year. Suppose also that midway through the year the prices of commodities and services, that the worker buys, go up, on the average, by 50%. It means that though the money wages remain the same, the real wages (consumption basket in terms of commodities and services) are reduced by 50%. Real wages also include extra supplementary benefits along with the money wages.