Why Wages Differ from Industry to Industry?– Answered!

Read this article to learn about why wages differ from Industry to Industry!

The general rate of wages in any industry depends on the demand for and the supply of labour in that industry.

The following factors influence the demand for labour and its supply:

Agreeableness and Disagreeableness of a Trade:

An agreeable or pleasant occupation will usually attract a larger supply of labour and, therefore, pay lower wages. On the other hand, an unpleasant job calls for higher wages. The most detestable of all employments, the hangman’s job, is paid more highly than any other work of equal difficulty. A teacher in a village school is very poorly paid as his work is light and respectable and, therefore, more agreeable than many others. Even an ordinary hawker earns more than what a school teacher does!

Difficulty and Cost of Learning a Trade:

When the trade can be learnt easily and inexpensively, it will have a large number of entrants. The marginal productivity will be low and so also the wage. Unskilled dock labourers are an excellent example. Sweepers in India are another. Caste compels them to keep to their work. Their numbers are large and, therefore, wages low.

Equipment Used:

The marginal productivity of labour depends on the kind of tools used. One of the main reasons why the earnings of cultivators in India are low is that their tools are inferior. An equally efficient farmer earns less in India than in America where he has better equipment.

Regularity of Employment:

In seasonal trades, the wages have to be higher as compared to those where work is regular. This is the reason why young men prefer low-paid jobs under Government to taking up an independent line where the earnings, though higher, are irregular.

Trust Reposed in the Worker:

Administrators have to be richly paid because their positions carry trust and responsibility. The wages of jewelers are higher than those of ordinary labourers for the same reason.

Chances of Success:

The greater the risk of failure, the higher the reward in case of success. Were it not so, the supply would fall short. A successful lawyer earns far more than a Government official, but the number of successful lawyers is small.

Extra Amenities:

In view of certain amenities being provided to the worker, the difference in wages may only be nominal and not real. A cook is paid less in cash than a peon, but he gets free food, free lodging and free clothes, and is thus really better paid than the peon.

Supplementary Income:

Where there is a possibility of having extra income, the regular wage may be lower. College teachers’ salaries are low but they have opportunities of earning extra income by writing books, undertaking private tuition or by checking answer-books.

Productivity:

This differs in different trades and grades. The cobbler’s job is not as productive as that of a skilled motor mechanic or of a clerk as that of the Principal of a college.

Efficiency:

Wages depend on the level of efficiency. For instant, one industry may require a high level of efficiency which is acquired only through long education and training followed by practical experience involving heavy expenditure. Wages in such industry will naturally be higher than in an industry where no such training is needed. For instance, the reward of an expert surgeon, who has taken ten years to learn his job, is bound to be greater than that of an ordinary language teacher who is fit to start his work after a year’s training only.

Government Regulations:

Sometimes authorities fix minimum wages in particular trades, thus reducing differences between these and other trades.

Non -competing Groups:

Society is generally divided into a number of working groups which are non-competing. Caste system creates such groups in India. As a result, a child born to a sweeper will most likely be a sweeper just as a blacksmith’s son will be a blacksmith.

Besides, the chances of receiving training for better-paid occupations depend on the resources of the family. Thus, inheritance, environment, training and sex are some of the main factors which create non-competing groups in the society and workers belonging to different groups are paid at different wage-rates.