Wage Employment Part 1

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in your locality we must have seen people busy in different economic activities. Some of them may be working for others to earn wages or salary. The others may be doing their own business and earn profit. What do you think about yourself? What will you like to do after completing your study to earn your livelihood? However, before choosing a career you must have a clear idea about the different avenues of employment. The previous four lessons dealt with career opportunities in self-employment. In the ensuing four lessons, including the present one, we shall discuss different aspects of wage employment.

Meaning of Wage Employment

Somebody who is working for others and earning his/her livelihood. Have you ever observed his/her activities? Suppose your friend Madhav is working regularly as an Assistant. Regarding Madhav’s job you can say that,

– He is working for an individual, or in a business firm, in an office, in a factory, or in a shop;

– He is known as an employee and for whom he is working is said to be his employer;

– He is being paid by his employer the remuneration for his work; and

– He works as per the terms and conditions laid down by the employer.

From the above observations we can say that Madhav is pursuing his career in wage employment. Thus, wage employment can be defined as ‘a mutual agreement between two parties (known as employer and employee) in which the employee (generally an individual) agrees to work for the employer (generally a business firm, government office or sometimes an individual) under some specific terms and conditions and the employer agrees to pay him some remuneration (may be in cash or kind) for his work’.

In wage employment, there are always two parties and the employee get wage or salary from the employer for his work. Wage is normally an assured amount (which is agreed upon by both the parties) given to the employee on a daily or weekly basis for his work. Similarly, salary is also a mutually agreed upon assured amount given to the employee by the employer for his work on a monthly basis.


After studying this lesson, you will be able to:




Characteristics of Wage Employment

Following are the characteristics of wage employment

Characteristics Of Wage Employment

Characteristics of Wage Employment

Characteristics Of Wage Employment

Two Parties

In case of wage employment there are always two parties involved. One is known as the employee and the other as the employer.

Contractual Nature

Wage employment is always contractual in nature. It is basically an agreement between two parties whereby one party works for the other under specific terms and conditions and the later party has to pay the former any mutually agreed upon wage or salary in return of his work. The whole employment relationship can be terminated by either party by giving a notice to the other party just like a contract.

Employer-Employee Relationship

The relationship between the two parties in wage employment is an employer-employee relationship. This is unlike a master servant, father-son or teacher-pupil relationship. Here both the parties are interdependent and interrelated. One cannot exist without the other. Both operate under some pre-determined and mutually agreed upon rules and regulations concerning their work relationship.


Remuneration is the return or reward that the employee receives from the employer for his work. This is one of the important characteristics of wage employment as this remuneration is determined and accepted by both the parties. This remuneration is known as wage or salary.

Terms and Conditions of Employment

In case of wage employment, the nature of work, working conditions, rules concerning work relationships etc. are decided in advance. Both the party abide to these terms and conditions of employment.

Distinction between Wage Employment and Self-Employment

Some people do not want to work under others. They want to be independent in their career and prefer to start their own business or profession. Such persons are said to be in self-employment. Let us now look at the various points of difference between wage employment and self-employment.

Table Distinction between Wage Employment and Self-Employment
Title: Table Distinction Between Wage Employment and Self-Employment

Wage Employment


The status of the individual is that of an employee.

The status of the individual is that of an owner and employer.

The individual works for another.

The individual works for self.

Income is in the form of salary or wage.

Income is in the form of profit.

Earning is limited. It is mostly predetermined and fixed having regular increments.

The scope of earning is unlimited. It depends upon the capability and contribution of the individual.

The nature of work is mostly routine except where one has to take independent decisions on policy and strategic matters.

The work involved is flexible and depends on what the individual wants to do.

Entire supervision and control lie with the employer.

The individual controls and supervises his own work.

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