Classification of Wages

“The wage is a sum of money paid under contract by an employer to a worker in exchange of services rendered by the worker”


Anyhow, more comprehensively,

“A wage is the remuneration paid to labour in return of services rendered either under contract or independently.”

Classification of Wages

The rewards of labour can be classified under the following categories:


If a person is highly paid, the remuneration is called salary e.g. the earning of a professor, engineer, etc.


The payment to the middle class workers such like typists, clerks, etc, for their services is called pay.


The remuneration which is paid to the inferior type of workers such like skilled or unskilled workers is, called wage.


Fee is the earnings of independent workers such like doctors, lawyers, etc.

Further Classification

Wages can further be classified on the basis of their form and manner of payment.

According to Manner of Payment

Time Wages

If a person is receiving his remuneration on the basis of a unit of time i.e. daily, weekly, monthly or yearly, the wages are called time wages.

Piece Wages

If a person is receiving his remuneration on the basis of his work done, is called piece wages.

According to Form

Nominal Wages

The total amount of money earned by a person during a certain period is called nominal wage. In other words, the amount which is paid to worker only in times of money is called nominal wage.

Real Wages

The total amount of satisfaction which a worker receives in the form of necessities, comforts and luxuries in return for the services, is called real wage.

These wags include nominal wages plus extra facilities and concessions such as free clothing, free housing, free electricity, free accommodation, etc.

Determination of Wage

Divergent theories have been introduced to determine wages. Anyhow, we shall discuss only two very important theories, i.e. the marginal productivity theory and the modern theory.

Note: Both these theories have already been discussed.

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