What is the Nominal Salary?

The nominal salary refers directly to the salary that is literally expressed in money, since it is the sum of money that is paid to an employee for his work performed during the agreed time.

When referring to this type of salary, the level or real value of the salary is not guaranteed, because the true value will depend entirely on the level of prices pertaining to personal consumption products, the value of services needed and the amount of taxes, among others.

How is the nominal salary today?

Currently, in certain countries where there is a system governed by the capitalism, although they appear to be an increase in salary expansion related to the monetary value, it is considered as real salary, which is perceived by employees with increases below the prices of articles of common use that meet the needs of the workers.

This decrease in value is due to the increase in the charges imposed, this is due to the fact that the state has the purpose that it be the workers who bear the full burden of the various difficulties economic.

On the contrary, in the nations where the system of socialism, the increase in nominal salary, especially when it refers to the worker level and workers who receive low wages.

Also when the salary is accompanied by some price reductions in basic consumer items of the workers, a fairly high increase is made, this measure is known as the real salary of the workers. workers.

The most important representative part in this system is the complement of nominal salary, which is generated from the social consumer funds that are destined especially for manage to favor all the collective needs of all those who participate in society socialist.

The payments made by the socialist state and other important social organizations formed with the For the same purpose, they may increase by approximately one third the income received by the workers.

While social production is being incorporated and at the same time the classification of employees is increased, will slowly approximate the wage levels of workers, workers and professionals until it is leveled at the same status.

Characteristics of nominal salary

Among the characteristics that relate to this type of salary, the following can be mentioned:

• It has the ability to represent the exact amount, in relation to the amount of money that a worker can obtain.
• In case the inflation and the nominal salary remains at the same level, a strong devaluation may occur.
• This type of salary cannot provide a complete idea of ​​the real level of salary.
• Its true magnitude will depend on the level of prices corresponding to basic articles of personal consumption, the volume of taxes and the value of common services.
• If a devaluation in nominal salary, the employee will be strongly affected, because he will not be able to cover his basic economic needs.

Difference between nominal salary and real salary

The salary is what every worker must legally receive, as part of his remuneration for doing his job. It is the amount that each company provides to its workers. This salary has the function of acting as a mechanism that conceptualizes salaries through a payroll.

Each salary will depend on the job, the level of study or profession, the hours of work that are executed and the type of payroll to which the worker belongs.

Nominal salary

It is nothing more than what each worker receives for providing their labor services to a certain company during a period of time. It can be calculated depending on government and business considerations, which are established in the law, especially if it refers to the protection of working capital.

Real salary

This has been the nominal salary that is studied under the relationship between the operation of the market and inflation. This salary reflects the level of purchasing power that an employee can obtain depending on their nominal salary.

If the nominal salary rises, but the real salary is affected by speculation or market instability, you are welcome The increase in salary will serve, since the worker will not have the economic resources to be able to obtain the products that cover their needs of him.

In the event that the real salary is the one that rises, it means that the employee may have more possibilities of accessing the market to receive the products and services that he needs. Otherwise, if the real salary falls, the quality of life of the worker will be affected, reducing their purchasing power significantly.

Balance between nominal salary and real salary

In economics it may be the case that the nominal salary can increase at the same time as real salary fallsThis is caused when there is an increase in products and services at the same time that the nominal salary increases.

That is why it is important that a state does not make consecutive salary increases, since in this way it will create a stable balance to the economy of a country.