Why would you be concerned about the concepts like Salary and Wage?
It has been an accepted fact that the history of the world is a history of the relationship between the different classes of people involved in the conditions of production (both product and service), out of which the concepts of salary and wage become the two most important factors.
Conditions of production determine one’s salary and wage, and these concepts attain immense significance as they are concerned about workers’ and employees’ lives, their loved ones and their own happiness in a society dominated by currencies.
What is meant by Salary?
There is a vague concept about salary that it is a fixed amount that is paid by the employer to its employee. Technically speaking, salary is the agreed upon amount of money that has to be extended at regular intervals, in exchange of the proficient work delivered by the employee in the specified field.
Some of the key features of Salary:
- It is not dependent on the number of hours an employee dedicates his time to the work, rather, salary depends on the performance and productivity in a specified field.
- Therefore, an employee who is paid salary is expected to work for certain number of hours of course, but is also bound to work for some extra time if the company demands so.
- In the recent structure of work across the countries including India, an employee’s salary depends on the concept called KRA (which stands for Key Resultant Area).
- In case of extra amount of work for more than stipulated hours, over time is not paid at all.
What is meant by Wage?
When the pay of the worker or the employee is based on an hourly basis, it is termed as a wage. Therefore, wage rate remaining same, if the worker gives extra amount of time, his pay is naturally increased. Wage is a concept that has been in vogue before the notion of salary came into existence. Wage rate all over the world has suffered a great drop after the economic policies of globalization are imposed, especially on the third world countries.
Some of the special characteristics of wage are given below:
- A wage is generally related to the unskilled and semi-skilled workers and laborers (except the Visiting and Guest Faculties who visit colleges for lectures on an hourly or class basis)
- Most of the companies pay higher rate of wage when the workers are asked to work on extra time especially on a holiday.
- It is the price of labor that a capital market or an organization buys.
- Wage rate and wage is subject to the laws of demand and supply of the market.
What is the Difference between Wage and Salary?
The following are some of the differences between Wage and Salary:
|Basis of Difference||Salary||Wage|
|Time period of Payment||It is generally paid on the basis of the number of weeks or a month. It is also measured on the basis of a year||A wage is generally paid on hourly and daily basis|
|Type of Cost||Mostly it is a fixed cost over a period of time||Mostly it is a variable cost depending on the demand and supply of the same|
|To Whom they are Paid||Usually to the White Collar Employees||Usually paid to the laborers and unskilled workers|