According to statistics, 95% of Russians consider wages to be their main source of income. Behind her are such ways of making a profit as securities, deposits and so on. Therefore, the essence of wages can be understood as remuneration for work and motivation for further career development. This is one of the most effective incentives to increase and improve productivity.
Salary can be represented as a monetary reimbursement of the time and effort spent by an employee on labor activity. How is the amount of this compensation determined? The answer to this question cannot be unequivocal. It is generally accepted that the employer must pay the employee a sum of money that is enough to meet the necessities of life. It is worth remembering that the basic set of consumer goods and services varies depending on the country and the specific stage of the historical development of society. So, the essence of wages is the creation of favorable conditions for the life of all citizens of the country.
How are cash rewards distributed? Typically, the level of income depends on the quality and quantity of human labor, as well as on the final results of the enterprise. In order to comprehend the essence of wages, you need to know some definitions. Labor cost is a category of labor formed on the basis of the ratio of supply and demand. Salary is a category of productivity. It is formed not only according to the market value of labor, but also taking into account factors such as complexity, conditions and social significance of work.
Considering the nature of wages, it is worth clarifying that the process of work itself has no value. Cash compensation comes from operating results. There is a so-called nominal wage. This concept refers to the amount of money received in a specific time period (hour, day, month). Real wages are the volume of various goods that can be purchased for a nominal monetary reward. That is, it is the purchasing power of the money received.
So, we examined concepts such as the nature and functions of wages. Now let's try to understand how monetary compensations for labor activity are formed. The level of wages is directly proportional to the ratio of supply and demand. The employer must provide the specialist with such an amount of money that he rejects all other employment options. However, if demand in a particular industry exceeds supply, the person has no choice, and he agrees to any proposed wage.
There are two main forms of monetary compensation for labor. Time wage - this is an option in which the employer pays for the time worked by the employee. A more modern form is piecework monetary compensation for labor. That is, salary is paid based on the results of activities. The second form is gaining popularity, because in comparison with the first, it has a lot of advantages. In particular, this is a powerful motivation for the employee to improve his work and increase productivity, which positively affects the well-being of the enterprise as a whole.
To summarize. The economic essence of wages is to provide citizens with the necessary necessities of life, which are formed on the basis of specific conditions and are distributed depending on the results of labor activity, as well as many other parameters, for example, the ratio of supply and demand for labor.
