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Causes of Wage Differences

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Different wages are paid to different workers in different works. Apparently, the skilled labour(workers) receive higher pay than the unskilled workers.

Different reasons account for the differences in wages, and that we are going to relay with you here. Here we go!

  • Relationship between demand and supply: The price of any commodity is determined by the relationship between demand and supply. The same thing applies to the wages paid to labour. If the demand for any labour is higher than its supply, there will a shift in wages paid. On the other hand, if the demand for labour is lower than its supply, wages will be low.
  • Skilled workers: Highly skilled workers(e.g engineers, medical doctors, lawyers, etc) usually earn higher than unskilled workers. This is because their supply is relatively small while their demand is high. Supply is kept down by the long years required to train them. In addition, only intelligent persons can undertake such long demanding courses.
  • Unskilled workers: The pay for unskilled workers is usually low considering the fact that anyone can do the work. The value of their work is small. Unskilled workers do not require any kind of long years of training for them to work.
  • Rare talents: There are few people with rare talents in the world and that is why their demand is very high. Rare talents command exorbitant earnings.
  • Productivity: Wages are sometimes determined by worker’s productivity. A company making high profits is likely to pay its workers higher salaries than the one making small profits or recording losses. This explains to some extent the high salaries paid by oil companies in Nigeria. In advanced countries where machines are freely used, productivity per worker is high. That is why they receive higher wages than their counterparts in developing countries.
  • Action of Trade Unions: Trade Unions are associations of workers with the aim of seeking workers’ welfare. Strong Trade Unions can force employers to raise wages of their members.

That’s the much we can give out, thanks for your time

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