Wage Policy in the Real Socialist System

Abstract

To understand the objectives of wage policy it is necessary first to define the functions of wages. Usually four functions are attributed to wages. (1) Income-wages are a determinant of consumption of the population,¹ approximately 70 per cent of which is financed from wages. (2) Motivational — this function stems from the first; because wages are a factor of consumption they can serve as an instrument of motivation. (3) Cost — wages as workers’ incomes are at the same time a cost to enterprises. (4) Allocative — wages help to distribute and redistribute labour.