In the real world, we find a good deal of differences in wages. A clerk gets per month Rs. 18000/-, a lecturer Rs. 45000/-, a principal gets 80000/- and so on. In the medical college doctors are paid more than the nurses.
An engineer in Government services gets less salary than an engineer in TCS and WIPRO. The question that naturally arises is: what are the causes of these differences in wage rates?
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There are various causes responsible for these differences in wages. Those are discussed below.
(1) Difference in Efficiency:
Different types of work require different abilities. The efficiency required of workers varies with occupations. The job of a clerk does not require so much of intelligence and ability as the work of a superior officer who shoulders heavy responsibilities. Such difference in abilities, intelligence, efficiency, responsibility, speed account for differences in wages in different occupations.
(2) Nature of the Job:
Nature of the work is another cause for difference in the level of wages. If the job is a pleasant and attractive one then the wage may be comparatively lower. If the job is unpleasant, risky, unattractive and degrades social prestige like job of a coal miner or sweeper the wages are comparatively high. We know a mining engineer marine engineer get more wages than a civil engineer because of difference in nature of job.
(3) Immobility of Labour:
Labourers are less mobile. They always stick to a job. It results in shortage and surpluses of labourers. Doctors may be shortage in Orissa but surplus in West Bengal.
The doctors are surplus in the urban centres of Orissa than the rural areas. They do not move from one region to the other. ‘This results in differences in wage rate.
(4) Presence of Non-Competing groups:
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In every society, there are different groups of labour which are not competitive. These are called non-competition labour groups. The groups are called non-competing because it is difficult for the members of one group to compete for jobs which are open to members of higher group.
Caste system in our country very often is a factor responsible for this people belonging lower castes cannot move up in the caste hierarchy to take advantage of high wages prevalent among the members of a superior group and thus creates differences in wages. For example, a brahmini cannot do the work of a barber or fisherman. A clerk cannot do the work of a Charted Accountant.
(5) Regularity of Employment:
If the employment is regular, continuous, and secure the wages are low. But if it becomes seasonal and discontinuous wages are bound to be high. In case of India people accept Govt. job with low salaries and private jobs with high salaries because Govt. jobs are secured and permanent.
(6) Future Prospects:
Prospect of promotion makes for the difference in wages. If in an employment there is greater future promotion wage rate is lower initially but increase gradually. But a job with low promotion prospects carries initially high wages.
(7) The Degree of trust and Responsibility:
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If the job is responsible and trust worthy the level of wage is high. Principal of a college is responsible for the whole college and thus gets higher salary than the peon of a department who has no such responsibilities.
(8) Training, Experience and Qualifications:
Jobs requiring higher qualifications, training and more experience command higher wages than jobs requiring lower training, less experience and qualifications.
(9) Trade Union:
Trade unions are responsible for the difference in wage level. Wages in different occupations are determined by the relative bargaining strength of the opposing parties. Wage difference also arises on account of difference in the strength of labour unions in the various occupations.
(10) Social Prestige:
A graduate hesitates to be a taxi driver where the income is higher than to become a clerk in an office with low salary. This is because society does not give respect to an educated labourer who does physical work.