Wage

Wage is the price paid for the use of the factor ‘labour’ in production. The payment made may be in cash or kind or both. Wage may be paid on daily or monthly or weekly basis. It may also be paid according to the contract. Thus wage may be defined as “the sum of money paid under contract by an employer to a worker for the services rendered.”

Labour As a Factor of Production             

If wage is the price paid for hiring Labour in the production process, then it would be proper to give a brief outline of labour as a factor of production and its characteristics or peculiarities. These characteristics also influence the determination of wages.

Labour is Perishable

Labour as a factor of production is perishable. Unlike capital and land, labour cannot be stored up. A day’s labour lost is lost for ever.

The Labourer Sells His Labour, Not Himself

When a labour works in a firm or office, he sells his labour power for which he gets his reward, wage. But he himself remains the owner of his own property (labourer).

Labour Is Inseparable From Labourer

A worker has to go to the farm or factory to work in person. A lecturer has to deliver his lecture in the class in person. He cannot get the work done by anybody.

Labourers Differ in Efficiency

Capacity to work differs from person to person. Ability, intelligence, training differ from person to person. Hence they differ in efficiency.

Labour is Less Mobile

Labour as a factor of production is less mobile in comparison to capital. Language, family affection and love and attachment of native place make labour less mobile.

Weak Bargaining Power

Since labour is perishable, its bargaining power is weak. The employer remains in an advantageous position vis-à-vis the worker when bargains for wages take place.