Why wages differ?

Reasons for differences in remuneration:

  • Skills/training: Jobs requiring higher level of skills and training usually fetch higher remuneration
  • Education/qualifications: Again jobs requiring higher level of education/qualification are paid higher remunerations.
  • Experience: People with vast experience will get higher remuneration as compared to a person with lesser experience.
  • Level of responsibility: Jobs with greater responsibilities are usually paid more.
  • Geographical area: Jobs located in urban areas are usually carrying higher remunerations because of higher living costs in cities. People working in trecherous geographical areas may get extra remuneration in the form of additional allowances.
  • Trade union membership: Trade Union members might end up negotiating better remunerations then non-trade union members.
  • Demand factors: Firms producing goods and services which are high in demand usually pay better remunerations to their workers.
  • Supply factors: Industries where there is a shortage of workers will usually pay higher remuneration to attract workers.


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