real wages

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real wages


Real Wages


wages expressed in terms of material goods and services, indicating the quantity of consumer goods and services a worker can actually purchase with his wages. Real wages are a function of nominal (monetary) wages, the level of prices, for consumer goods and services, and the level of taxes. The dynamics of real wages are calculated for a particular period of time as an index equal to the quotient of the index of nominal wages and the price index for goods and services.

Under capitalism, prices for goods and services increase continuously, as do taxes. Even though the class struggle of the proletariat results in increases in nominal wages, these increases are usually less than price and tax increases. Consequently, there is a tendency for real wages to decrease, and this tendency grows more intense, owing to the chronic inflation that is characteristic of the period of the general crisis of capitalism. In an effort to conceal the true condition of the working people, bourgeois statisticians lower the price index when computing real wages, exclude the army of the unemployed from the calculations, and include in the “average” wage of the workers the salaries of highly paid office employees, managers, and company directors.

In the socialist countries, the general pattern is an uninterrupted increase in real wages, based on the increasing productivity of labor in the national economy and on the increasing efficiency of social production. The increase in real wages is one of the most important sources for improving the prosperity of the people. Under socialism an increase in real wages results not only from an increase in nominal wages but also from a decrease in taxes and the stabilization of prices for goods and services. On the level of the national economy, the average monthly wage of factory workers and office employees in the USSR was 140.7 rubles in 1974, 122 rubles in 1970, and 80.6 rubles in 1960.

Between 1971 and 1974 the implementation of centralized measures alone increased the wages of 47 million persons, or every second factory worker and office employee. Moreover, the ninth five-year plan (1971–75) eliminated taxes on the wages of factory workers and office employees earning up to 70 rubles a month and lowered the tax rate by more than one-third for workers earning up to 90 rubles a month. From 1965 to 1972 the index of state retail prices amounted to 75 percent of the average annual prices for 1950, with foodstuffs (excluding alcoholic beverages) amounting to 71 percent of the 1950 figure and nonfood commodities amounting to 76 percent of the 1950 figure in 1965 and 74 percent of that figure in 1972.


References in periodicals archive ?
It shows that, from 2001 to 2016, labor productivity grew by at least 50 percent, yet the real wage did not grow at all.
While the pay squeeze which saw real wages fall back in 2017 is set to come to an end, it said that a "noticeable" year-on-year rise in real pay was not now forecast until December 2018.
Alternatives to conventional measures of real wages, as well as direct indicators of consumption spending, suggest that below-median income families have seen gains in material well-being since 1960.
Workers around the world are expected see real wage increases of 2.
Summary: Real wages of Ukrainians in June 2015 decreased by 26.
The founder and publisher of the bimonthly journal Grant's Interest Rate Observer, he argues that the main difference between the two downturns was that in the earlier one, real wages fell sharply, whereas in the later one, they rose by 10%.
In fact, real wages have been rising slowly for several years.
REAL WAGES have not keep up with productivity growth over the last 30 years of "trickledown economics", according to the Council of Trade Unions (CTU).
Between 2003 and 2013, real wages (wages after inflation) for factory workers declined 4.
TUC Midlands regional secretary Lee Barron said: "Despite growth returning, 2014 was another miserable year for living standards in the West Midlands with real wages falling by over PS1,000 in real terms.
While average house prices have yet to reach their pre-recession peak in many parts of the North West, falling real wages means that homes remain out of reach for local people, says the TUC.
At the same time as this pattern of relatively strong employment and poor productivity performance, the UK has experienced a significant fall in real wages.