1. Nominal Wages :-
The amount which is paid in terms of money to the workers, for the services rendered by him during a certain period is called the nominal wages. For example you pay Rs. 1000 to the servant monthly, it is his nominal wage.
2. Real Wages :-
These refers to the total amount to satisfaction which one worker receives. Real wages include money wages and other facilities like free accommodation and free clothing.
Important Factors of Real Wages
Following are the important factors on which the real wages depend :
1. Purchasing powers of money :-
The real wages of labour depend upon the purchasing power of money. If the nominal wages are high and prices of goods are low, then the real wages will be high. On the other hand if prices are high then real wages will be low.
2. Working hours :-
When two persons are earning the same amount but there is difference in their working hours. The worker whose working hours are less his real wages will be high. For example if a worker receives Rs. 500 monthly by working 6 hours a day and the other 10 hours a day, the real wages of the first will be high.
3. Social status :-
The money wages of a bank officer and judge may be equal but the real wages of judge are higher than banker due to social status.
4. Extra income :-
If a person has an opportunity of earning extra income in certain occupation then his real wages will be higher than other who does not have. So a real wages of a teacher is higher because he can earn the money by writing books.
5. Chances of promotion :-
If the chances of getting promotion in future are bright in certain occupation then the real wages of the workers will be high otherwise low.
6. Nature of work :-
If the nature of work pleasant and agreeable then real wages will be high even if the normal wages are low. The main workers real wages are low; even nominal wages are high.
7. Tenure of service :-
The person who has a permanent job, his real wages will be high than that person whose job is temporary.
8. Form of payment :-
If a worker receive Rs. 10000/- monthly and there is no extra facility, like food, or clothes then his real wages will be lower than the one who earns Rs. 10000/- and other facilities.
9. Training and education expenses :-
Expenses of training and education also affect the real wages. For example , one person is Master degree and other is matriculate; both are clerk. The real wages of matriculate will be higher because his educational expenses are low.
10. Burden or Responsibility :-
In the administrative departments the real wages are low than the education department because in these departments the burden of responsibility is greater.