Nominal Wage

under socialism, the amount of money that production and office workers receive for their labor according to quantity and quality. Under capitalism, the nominal wage is the sum of money that an employee receives for his or her labor power.

The nominal wage represents the wage level regardless of any change in the price of goods and services, thus differing from real wages. The latter is determined by how much of the means of existence the worker is able to purchase with the nominal wage. In capitalist society an increase in the nominal wage is often associated with constant or decreasing real wages.

In the USSR, raising the nominal wage is one method used to increase real wages and to improve the well-being of all working people. During the years of the eighth five-year plan (1965–70), the nominal wage grew by 26 percent, with further increases anticipated. Beginning in 1972, the minimum wage is being raised to 70 rubles in the production sectors of the national economy, with simultaneous increases in average wage rates and salaries in all occupational categories. An increase in nominal wages enhances the material incentive for workers to improve their output and to raise the efficiency of public production.