Labor income, also known as compensation of employees, is the income from the work done for others. As payment for their work, employees receive compensation. There are different types, and labor income is included.
- Wages and Salaries (Cash): This forms the core part of compensation and includes basic salary, bonuses, overtime pay, and various allowances given to employees.
- Employers’ Social Security Contributions: Social security schemes such as pensions, provident funds, gratuity, and insurance are included in national income as deferred wages for past services. However, we do not include old-age pensions, as they are considered transfer payments. Also, employee contributions are not included, as they are paid from wages and salaries.
- Payment to employees in kind: This includes non-cash perks provided to employees, rent-free accommodation, free or subsidised medical and educational facilities, free or subsidised food, uniforms, free transportation, recreation and holiday facilities, creches for employees' children, free electricity provided by employees, etc.
