Salary and Wage Differences

What is Salary?

Salary is often equated with the term wages, but the definition of real salary is different from wages when viewed from the context. Salary is a form of periodic payment from an employer to an employee stated in an employment contract. In Indonesia, the size of the salary is usually done in a period per month.

If you look at it from a business operations perspective, the costs incurred for salaries can be considered as costs required to obtain human resources to carry out operations of the business, therefore salary costs are also often referred to as personnel costs. And in accounting books, salary costs are recorded in the salary account.

Then, what is the difference between salary and wages?

Salary and Wage Differences

Unlike salaries that are fixed every month and will continue to be received during the work period, the value of wages is generally agreed upon at the outset. Many private companies have a fixed-term employment agreement (PKWT) system, and it is these contract employees who receive wages, not salaries. This is what distinguishes between salary and wages.

Wage or Salary System in Economics

Although different in context, salary arrangements in law are regulated in legislation related to wages. To find out how the salary system, here is the wage system in economics:

  1. Wage system according to time, the amount of wages or salaries is based on the length of time a person works. The unit of time can be calculated hourly, per day, per week, or per month.
  1. Wage system according to the unit of yield, the amount of wages or salaries is based on the amount of goods produced by someone. Units for calculating work output can be in the form of pieces of goods, per unit length, or per unit weight.
  1. The piece rate system, the amount of wages or salaries is determined based on the agreement between the employer and the worker.
  1. The participation wage system or commonly called bonus wages, the bonus wage system is an additional payment outside of wages or salaries intended to encourage (provide incentives) so that workers can carry out their duties better and more responsible, with the expectation of higher profits.
  1. The business partner system, payment of wages or salaries in part is given in the form of company shares, but the shares are not given to individuals but to workers’ organizations in the company.
  1. The system of changing scale wages or sliding scale , the provision of wages or salaries is based on the scale of sales results that are always changing. If an increase in sales results occur, the amount of service fees paid will increase and vice versa.

Other Salary Related Terms

  • Net Salary salary received by workers (employees) after deducting deductions; salary paid (in cash) after deducting all deductions;
  • Monthly salary salary paid once a month;
  • Blind Salary salary received without work;
  • Gross Salary salary recorded before deducting deductions;
  • Basic Salary a basic component of a person’s income that is used as a benchmark for calculating other components, such as family benefits, housing benefits, and incentives; basic wages (which have not been added to other benefits);
  • Paying paying (giving) salary,  hiring people by paying salary.
  • Payday payday payday; receive a salary that is paid
  • Payroll : process, method, payment of salary (wages, etc.)

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