Causes of Wage Difference

Causes of Wage Difference are as follows:

Differences in Efficiency

Some occupations require more efficient workers than others. The efficiency required of workers varies with occupation and employment. Agricultural workers are less efficient than the industrial workers. So industrial wages are higher than the agricultural wages. A doctor is more efficient than a nurse in treating a patient. An engineer is more efficient in planning and designing a particular project than a draftsman. Therefore doctors get more wages than the nurses and the project than a draftsman. Therefore doctors get more wages than the nurses and engineer gets more than the draftsman. Thus difference in abilities. Intelligence and efficiency account for differences in wages in different occupations and also within the same occupation.

Immobility of Labour

Mobility of labour refers to the movement of labour from one region to another region or from one occupation to another occupation. Free mobility of labour tends to eliminate wage differences between places and occupations. But in actual world, labour is less mobile. Homesickness, language, custom, distance, transport bottlenecks or simply the ignorance of the workers may act as barriers to labour mobility. As a result differences in wages between occupations and regions persists in underdeveloped like India. Immobility of labour is one of the main reasons responsible for imperfections in the labour market.

Presence of Non-competing Groups

The total available number of workers in a country does not consist of a single mass of homogeneous units. But on the contrary, they are divided into groups which are often non-competing. 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 another group.

Nature of Work

Differences in wages among different occupations may sometimes be due to differences in risk, disagreeableness of work, cost of training and the like. If an occupation involves great risk to life and health, the workers would be offered higher wages compared to wages prevalent in normal and easy-going job. A labourer in coalmine gets higher wages than a peon in office. Similarly a specialist doctor gets higher wages due to the high cost of his education and training.

Strength of the Trade Unions

Perfect competition is an ideal market structure but never found in the real world. This is also true in case of labour market. Labourers in different industries and occupations generally combine themselves under trade unions. The trade unions with their collective bargaining power can secure higher wages. In occupations and trades where the workers are less organised, their bargaining strength is weaker and they get lower wages. In our country, for example, the industrial workers’ are more organised than the agricultural workers. Hence they get higher wages.

Education, Training and Experiences

There are certain occupations which require expensive education and specialised’ training. The wage rate in these occupations becomes higher. For example, specialist doctor, engineer, scientists get salary due to their expensive education and special training. But no such special education and training is necessary for clerk. Hence his wage rate is lower. Similarly higher the experience, higher is the wage rate.

Future Prospects

Prospects of promotion in an occupation are also responsible for differences in wages. If promotion prospects are better, workers will be attracted to it even though the initial wages are low.

Scope for Extra Earning

If regular wages are low but there is enough scope for extra earning, people will be attracted towards that occupation. Doctor’s salary may be lower than a bank officer. But people are attracted towards the medical profession because of the scope of extra earning through private practice.

Steadiness of Employment

If the work in an occupation is seasonal or irregular, then wages would be higher. If work is regular and there is security of service, then wages offered would he lower. This is called steadiness of employment which attracts the workers even though the initial wages are low.

Wages of  Women

There is a difference between wages of men and women, physical, social and biological factors are responsible for this difference. Generally they cannot do strenuous and hard work. Marriage and pregnancy stand on their way to perform any work on a regular basis without interruptions.  Again in a country like India, custom does not permit woman to come outside and work. All these factors are responsible for low wages of women.