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What is Actual Salary definition/concept

The term real wage refers to the purchasing power of the nominal wage in terms of goods and services. This means that the variation of a nominal wage must always take into account the country’s inflation to represent the real wage. So, for example, if the net nominal wage increases 10% in one year, but inflation increases 15%, this difference leads to a 15% drop in purchasing power. The main way to know inflation is the CPI, that is, a price variation that integrates a basic basket in relation to a previous period; It is important to understand that the take-home salary refers to a salary with all the corresponding deductions for taxes, in addition to the bonuses for productivity, overtime, etc.

Classical authors considered that the accumulation of capital caused a wage increase in real terms, as it reflected in social wealth . Another important factor was the increase in productivity in relation to the topic. Some argued that wages could be increased for one good but decreased for another. However, the general opinion is that the salary increases or decreases in real terms according to the possibility of purchasing a basic food basket, which is the main need . Actual Salary

For Keynes, real wages show a countercyclical behavior due to their delay in expansions and increase in recessions. Thus, in expansions, prices increase in greater proportion to wages, and in recessions, prices decrease to a lesser extent. So it is important to understand that Keynes focuses his analysis on the short and medium term. Actual Salary

In most countries, real wages grow slowly but steadily over time; this despite problems such as crises or periods of recession. This circumstance is mainly due to the increase in productivity as a result of technological development, investments , the improvement of processes achieved by some economic agents, etc. This basically means that a larger percentage of the population has access to a greater amount of goods and services. However, this must be considered globally, as there are countries that have shown a reduction in the real wages of the working class. In this sense, there are still many doubts to clarify.

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