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Base Wage Rate - Meaning & Definition

Published in Human Resources Terms by MBA Skool Team Last Updated: July 15, 2023Reading time:

What is Base Wage Rate?

Base wage rate is the minimum fixed amount of money which a worker is entitled to be paid by his employer. It excludes the additional benefits like bonuses, allowances, or any such compensation. This rate is fixed by the government in case of public sector jobs and by the contract of the company in case of private sector jobs.

Base wage rate ensures that the workers or employees are adequately paid for their services without exploitation from their employment. These rates are sometimes location specific in a particular country and usually different for different countries.

These rates can be set according to monthly or bi-weekly or even hourly basis based on the type of job performed. Base rates also change with the position held by an employee in a company- from training period to any managerial post.

The disadvantage of having a base wage rate is that employers usually fear to hire newer employees as they would have to pay the employees this minimum pay as package, thereby, creating unemployment.

The advantages of base wage rate are they help in reducing the income gap between poor and rich people; prevent exploitation of services, helps employees in not giving up the job etc.

Hence, this concludes the definition of Base Wage Rate along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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