Write a short essay on the wage system.

1. Introduction : The wage system,like several other economic institutions has its roots in the past. During the medieval age, traders and merchants used to hire labour for producing handicrafts work.

In the putting out system of manufacturing, the merchants provided the raw material to the labourers and got from them the finished goods.

The workers were paid by the merchants for their labour.

2. Traditional Agrarian Economy and the Wage System: In the traditional agricultural economy as in India, the wages were not paid in cash and the rate of wages was not fixed. Sometimes, rich farmers used to take the services of the workers without making any payment for it. The workers had to same under a customary obligation. It was called begaar (i.e. the forced labour or to take labour without any payment).

3. The Wage System in Industrial Economy : (a) With the advent of industrial economy, the institution of wage became formly established. The wage rate is now fixed; and forms the part of contract between the employee and the employer and is governed by law. This is unlike the traditional wage system in which the relationship between the master and the men was very personal and informal.

(b) In the modern economic system, this relationship is formal and impersonal, and is governed by legal conditionalities on both sides.

(c) The institutions of trade unions for the workers and associations for the employers have emerged for the protection of their interests in these contractual dealings.