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# Salaries and Wages

People can earn money in many different ways. The two most common ways are through salaries and wages. Those who work for an employer are usually paid a wage or a salary. Alternatively, you could be self-employed, and earn by charging a fee for your services or sell goods for a profit.

We will look at all these concepts in greater detail shortly. First let us look at the key concepts of salaries and wages.

## Salaries

A salary is a fixed annual (yearly) amount paid to an employee. It is usually divided into weekly, fortnightly or monthly payments. A person who receives a salary is paid to do a job, regardless of the number of hours worked.

When calculating salaries, we need to remember the following:

 1 year = 52 weeks = 26 fortnights = 12 months

Typically, salaries are paid to employees that work ‘full  time’ for an employer i.e., those that are in continuous and long-term employment with an employer. Examples of professionals that earn salaries include teachers, government employees, police officers, accountants, engineers, etc.

Let’s look at a few examples of earning a salary.

Example 1 : Joe is a police officer earning \$78,000 per year. Calculate Joe’s fortnightly salary.

There are 26 fortnights in a year. So Joe’s fortnightly salary

=  \$78,000  ÷  26

=  \$3,000

Example 2 : Jenny is a teacher who is paid a weekly salary of \$1527.35. What is her annual salary?

Since there are 52 weeks in a year, Jenny’s annual salary is

=  1527.35  x  52

=  \$79,422.20

## Wages

A wage is money that is paid at an hourly rate to a person doing a job. In other words, a person’s wage is calculated based on the number of hours they worked in a given period.

Generally, wages are paid to employees that work ‘part-time’ or ‘casual’ for an employer i.e.,those that are not in a permanent or long-term employment. They may work at specific times or days or for pre-defined periods of time. People who earn a wage include waiters, supermarket check out persons, etc.

Example 3 : Tina is a part-time waitress at a local restaurant. She is paid \$10.50 per hour. What is Tina’s wages in a week during which she works 22 hours?

To calculate the wage, we need to multiply the hourly rate by the number of hours worked.

So Tina’s weekly wages  =  \$10.50  x  22  =  \$ 231.00

Example 4 : Tom works as a bartender 3 days a week. He is paid \$12.35 per hour and works 20 hours a week? How much does Tom earn in a fortnight?

Tom’s weekly wages  =  hourly rate  x  number of hours worked

=  \$12.35  x  20

=  \$247.00

His fortnightly wages  =  247  x  2  =  \$494.00

Here are some more examples of salaries and wages.

Examples of salary calculations

Examples of wage calculations

Overtime earnings