A wage is monetary compensation (or remuneration, personnel expenses, labor)
paid by an employer to an employee in exchange for work done. Payment may be
calculated as a fixed amount for each task completed (a task wage or piece
rate), or at an hourly or daily rate (wage labour), or based on an easily
measured quantity of work done.
- Wages are part of the expenses that are involved in running a business.
- Payment by wage contrasts with salaried work, in which the employer pays
an arranged amount at steady intervals (such as a week or month) regardless
of hours worked, with commission which conditions pay on individual
performance, and with compensation based on the performance of the company
as a whole. Waged employees may also receive tips or gratuity paid directly
by clients and employee benefits which are non-monetary forms of
compensation. Since wage labour is the predominant form of work, the term "wage" sometimes refers to all
forms (or all monetary forms) of employee compensation.
- Wages are also a means of providing income for employees and as a cost
of doing business to the employer. In a wider sense, wages mean any economic
premium paid by the employer under some contract to his workers for the
services delivered by them. In this way wages constitute of financial
support, family allowance, relief pay and other benefits. Whereas in the
narrow sense, wages are the price paid for the services of labour in the
process of production and it count only the wages proper or performance
Origin of Wage
Wage is a reward for the services rendered or remuneration for the work done and
it is as old as the society itself. In the primitive days, wages were paid in
kind, most common of them was grains and the food. But with the advent of
industrialization wages form a complex problem and in almost all industrialised
countries it became a sensitive area of public policy. Very soon the quantum of
wages assumed a common cause of friction between the employers and the
Frequent disputes between employer and wage-earners resulted in
strikes over the demand for wage-increase. The determination of adequate wages
that should be justifiably payable to die workmen by the employer, was not
merely an economic problem but a multidimensional phenomena, necessarily
involving relevant factors like place of industry, prices of the product, living
standards, basic needs of die wage-earner and the governmental policy in a given
The natural instinct of the employer to keep the wage-bill to a minimum and
workers struggle to secure a wage-increase to meet both ends, created a chaotic
situation which demanded an immediate State’s intervention to protect the weaker
section of the society, namely, workers, in view of its low bargaining capacity.
Meaning and Definition of Wage
According to Section 2(h) of the Minimum wages Act, 1948 the term wages
means all remuneration capable of being expressed in terms of money which would
if the terms of the contract of employment express or implied were fulfilled be
payable to a person employed in respect of his employment or of work done in
such employment and includes house rent allowance but does not include-
(i) the value of -
(a) any house accommodation supply of light water medical attendance or
(b) any other amenity or any service excluded by general or special order of the
(ii) any contribution paid by the employer to any person fund or provident fund
or under any scheme of social insurance;
(iii) any traveling allowance or the value of any traveling concession;
(iv) any sum paid to the person employed to defray special expenses entailed on
him by the nature of his employment; or
(v) any gratuity payable on discharge;
Wage Variation / Varieties
Wages levels differ from one to another and relative difference in wage levels
is called wage variation or varieties. Hence, there are differences in wage
rates. There are various factors like political, behavioural, ethical, social
and economic factors on which wage levels depends .There are three types of
variations or wage varieties in wage rates.
Regional Variation means different wage rates in difficult
regions for the same work in the same industry. This may be due to several
factor such as demand and supply of the workers, cost of living index, standard
of living and economic development.
When wage rates changes according to time that means changes in
wage rates due to time which is termed as time variation. It is only the
economic conditions of the country which determine the different wage rates time
to time. In inflationary pressures the wage rates are high, whereas in slump
period may be low.
When one industry may pay more or different wage rates to
its workers in the same region for similar work that is called Industrial
Variation. Wages may differ from industry to industry. Various factors such as
nature of work, demand and supply of skilled labour, place of industry in the
national economy and working conditions in the industry etc influence the wage
Three Types of Wages
Living wages are defined as that wages which are consistent to provide certain
facilities as well as some basic necessities to the employee. So, it means that
wage level which is satisfactory to provide for the basic necessities and such
niceties that are advised necessary for the betterment of the employee as well
as his family in accordance with his social status.
Thus, living ages has been
defined as follows:
The living wage should enable the male earner to provide himself and his family
not merely the basic essentials of food, clothing and shelter but a measure of
frugal comfort including education for the children, protection against
ill-health, requirement of essential social needs and measures of insurance
against old age.
Article 43 of the Constitution of India states that the state shall endeavour to
secure by suitable legislation or economic organisation or in any other way to
all workers, agricultural, industrial or otherwise work, a living wage,
conditions of work ensuring decent standard of life and full enjoyment of
leisure and social and cultural opportunities. So, the government of India has
adopted as one of the directives of the principle of state policy to ensure
Living wage is a wage sufficient to ensure the workman food, shelter, clothing,
frugal comfort, provision for evil days etc. as regard for the skill of an
artisan, if he is one.
Thus, Living wages does not mean to fulfill only for the basic necessities of
life to employee such as food ,shelter and clothing, but also it include for
some comforts, leisure and amenities estimated by current human standards such
as health, education of children, travelling, old age, recreation and social
The term Minimum Wage
has not been defined in the Minimum Wages Act, 1948.
The minimum wage is the lowest wage in the scale below which the efficiency of a
worker is likely to be inspired. The minimum wage includes not only the bare
physical necessities but also a modicum of comfort otherwise known as
conventional necessities. The Minimum wages must, therefore, provide not merely
for the bare subsistence of life but also for the preservation of the efficiency
of the worker. For this purpose, the minimum wage must also provide for the
same measure of education, medical requirements, and amenities.
employer who is unable to pay this minimum wage to workers has no right to
exist. Where a person provides labor or service to another for remuneration
which is less than the minimum wages, such labor is 'forced labour' within the
meaning of Article 23 of the Indian Constitution and thereby entitles the
person to invoke Article 32 or Article 226 of the Constitution of India.
The Concept of fair wages was to be dynamic. There is no reason to assume that
fair wages fixed years ago should continue to be fair wages for al time, and any
fixation of minimum wages, should be taken not as minimum wages but as fair
wages because it is above the fair wages once fixed.
Constituents or Components of Minimum Wage
According to Section 4 of the said Act, (Minimum Wages Act, 1948) consists of
- (1) Any minimum rate of wages fixed or revised by the appropriate government in
respect of scheduled employments under section 3 may consist of:
(i) a basic rate of wages and a special allowance at a rate to be adjusted
at such intervals and in such manner as the appropriate government may
direct to- accord as nearly as practicable with the variation in the cost of
living index number applicable to such workers;
(ii) a basic rate of
wages with or without the cost of living allowance and the cash value of the
concessions in respect of suppliers of essential commodities at concession
rates where so authorized; or-
(iii) an all-inclusive rate allowing for
the basic rate the cost of living allowance and the cash value of the
concessions if any.
- The cost of living allowance and the cash value of the concessions in
respect of supplies of essential commodities at concession rate shall be
computed by the competent authority at such intervals and in accordance with
such directions as may be specified or given by the appropriate government.
Fair wage means which is something more than the minimum wages. It is a mean
between the minimum wage and the living wage. So, the lower limit of the fair
wage must surely be the minimum wage whereas the upper limit is the fair wage
which is capacity of the industry to pay further the comparisons definitely with
the average payment of same work in other occupations or trades which requires
the same amount of ability. Basically, it is economic position and its future
prospects on which fair wage depends.
Further, there are certain factors like
minimum wages, capacity of the industry to pay, level of national income and its
distribution, productivity of labour, the place of the industry in the economy
of the country and prevailing wage rates in the same or similar occupations in
the same or neighbouring localities on which fair wage depends.
Fair wages mean the remuneration which is paid to the workers for the jobs
requiring equal efficiency, difficulty and pains.