Wage is determined asymmetrically: Workers have no alternative but to accept

WAGE – One

In the same organization CEO’s determine the high wage for them and lowest for majority of workers. Is not it discrimination!…Even cheap labour has been searched globally, instead of increasing their citizen’s minimum wage rate.

downloadNormally wage is determined asymmetrically. Super rich, footballer, billionaire are (allowed?!) to capture almost all national income. Why this happen today? I will post my long research article here in three post. Please follow me and keep reading for the interesting views on wage how it is determined and how wage disparity has been created income gap!


Wage is the payment for the use of labour services. As like other factors of production labourers get wage from the national income. Wage can sufficiently preserve human resource and motivate them to the work. Three factors, i.e. good salary, job security and promotion represent good environment of work. But the issue is whether the wage is determined rationally or not.

Minimum wage rate is much talked issue over a period of time as it is considered that to have increased.  The actual real wage is decreasing due to inflation. Decreasing real income, freezing wage rate since long and austerity measures are the factors making low income group’s life even harder. Though human resource is considered as a creator and organiser of development but wage is not paid global attention. But in contrast cheap labour has been searched globally, instead of increasing their citizen’s minimum wage rate. So considering the fact this article analyses the scenario of minimum wage rate to manage labour wealth of the country

 Way to determine wage rate


As like others commodities there are some basic principles of how to determine the wage rate. According to Subsistence Wage Rate wage must be provided to fulfil the basic needs. It is presumed that  ‘‘The wage earner cannot get more than is physiologically needed to preserve his capacity to work and to enable him to raise the number of children required to replace him when he dies.’’a Meaning at least food, health, education, transport and social/ritual needs of the family must be fulfilled from their wage earnings. Wage is paid for the subsistence level. If wage rate is higher than subsistence level then population starts to increase. If it is higher, then population/workforce will be illiterate and unhealthy. There is an inverse relation between population growth and wage rate.

wage dis

Wage Fund theory says wage is determined based on availability for the wage. To determine the wage rate total amount of wage fund is divided by the available numbers of workers (e.g. w=c / p).  Meaning is higher the number of workers lower the wage rate, and vice versa.

According Marginal Productivity theory wage is determined as per the individual production capacity of a worker. Meaning higher the productivity of the labour higher is the wage rate, and vice versa.

 Wage rate is also determined by demand and supply of labour forces where higher labour force available would be lower the wage rate and vice versa.  Demand of labour is determined by the economic size and supply of labour is determined by population growth. Where there is demand and supply of labour is equal that is the point of minimum wage rate. (w=DL=SL)

 Likewise in the globalised labour market foreign nationals (migrants) and technology intensive production can also be offered to manipulate wage rate. Also, wage is determined by bargain (Bargaining Theory) and Residual-Claimant theory.

But no worker knows how and under which theory their wages has been paid; neither any policy clearly tells that workers should be informed about how their wage is determined on what basis, sheer confusing or ignoring. Normally wage has been determined asymmetrically. In the same organization CEO’s determine the high wage for them and lowest for majority of workers. Is not it discrimination!


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