Salary or salary

economic-dictionary

The salary or salary is the remuneration received by a person as payment for their work. In this way, the employee can benefit from his contribution in time and effort to the company that hires him. In the same way that you can see that contribution translated in monetary terms.

The salary, understood as the price to be paid in exchange for the work performed by a person, is determined according to the supply and demand of work. All this, given by various factors such as the availability of labor, union agreements, the training or experience of the worker and the country's labor legislation.

In addition, in the economic study, wages acquire a special relevance. Relevance both from the business point of view (where they constitute a significant part of the production costs), and from the point of view of the families (since they determine their consumption capacity and, by extension, the aggregate demand of an economy) .

Minimum salary

Since the salary is the income that each person receives, many governments establish social measures to ensure that a minimum amount is offered to live. This amount is known as the "minimum wage".

The minimum wage is the lowest consideration that a worker can receive for his work with a given day. In the same way, one can speak of maximum wages. These function as legal ceilings to which employee remuneration must be adjusted. Both the minimum and maximum salary are determined by the legal system of each country and are part of their respective labor laws.

Salaries, through taxes, are one of the main sources of funding for the States. Since these force to deliver a proportion of the salary to the Government. Depending on the country, they are paid in one way or another. The most common is that these taxes are divided into two: the payment fee to Social Security and the personal income tax (IRPF).In this way, the gross salary is the total amount of the consideration received, while the net salary is the result of deducting from that amount the mandatory contributions, as well as the possible tax withholdings.

Components of salary

A salary can also have several components. At the same time, this may not be calculated uniformly. Thus we have the "base salary", which is usually the standard remuneration assigned to the position held by the worker.

However, the employee may receive performance incentives that are added to the previous salary and increase the total amount received.

If, on the other hand, the worker does not receive a basic salary, his remuneration being an incentive ratio, we would speak of a «commission salary». Finally, there are goods or services that can be used as payment for work and that constitute a “wage in kind”.

Tags:  Business comparisons finance 

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