THEORIES ONWAGES

A Report By: Richard F. Fermocil

Theories on Wages• Are explanations of wage rates and structures.

Wage RateIs the basic pay including cost of living allowances and other guaranteed or regularly paid allowances exclude overtime payments, bonuses, and gratuities, family allowances, and other social security payments made by employees, as well as ex-gratia payments in kinds, supplementary to normal wage rate.

Theories of Wages• Theories and wages attempts to describe

the structure of wages rates and salaries and relate the conditions to functions that influence them.

Theories of Wages• Wages and salaries change from time to

time and vary for one market to another.

• Wage theories seek to identify and describe the functional relationship between wage rates and salaries on one hand, and cases factors on the other.

Just Wage Theory• This theory gained wide acceptance

during the Middle Ages.• Wages became important considerations

as a number of artisans and craftsmen increased.

• Most of the workers were closely related.

Every man has the duty, imposed by nature and his Creator, of preserving his existence which he holds for God. He has, therefore, the right imposed by nature and not by society – of finding in his work the means of providing for himself and his own.

Principle

Just Wage Theory• Just wage , because they are compensation for

work done by children of God, raise significant issues of human dignity and equity. Christians cannot ignore wages, but our reflection cannot be conducted within a theological cocoon.

• We must grapple seriously with the practicalities of economics and business administration and politics.

• Nowhere do theology and economics converge more directly than in the area of wages. The Bible is filled with references to wages and wage-earners, and the sheer fact that wages are compensation for work done by children of God makes them intertwined with significant issues of individual human dignity and matters of equity. At the same time, wages result from economic transactions, buyers and sellers exchanging money for service. Wages levels are closely tied to a wide variety of macroeconomic factors like productivity, prices, employment, and purchasing power.

Just Wage Theory

Just Wage Theory• Thus, Christian reflection cannot ignore wages, but our

reflection cannot be conducted within a theological cocoon. We must grapple seriously with the practicalities of economics and business administration and politics. Let us steer clear, however, of the notion that the “laws” of economics are, like gravity, unalterable. In truth, the economy is a purely human construct, its structure and operation influenced heavily by the values and attitudes people hold. Consequently, what is desirable need not be shackled by mere references to “economic reality”. Unlike gravity, values and attitudes change.

Just Wage Theory

• That those who “sell” their labor to an employer should received a living wage can be deduced from two related but rather distinct Christian traditions, the just wage theory of the scholastics and the more modern effort to combat poverty.

Family Wage

• A family wage is a wage that is sufficient to raise a family on. This contrasts with a living wage, which is generally taken to mean a wage sufficient for a single individual to live on, but not necessarily sufficient to also support a family. As a stronger form of living wage, a family wage is likewise advocate by proponents of social justice.

The simple agreement between employee and employer with regard to the amount of pay to be received is not sufficient for the agreed-upon salary to qualify as “just wage”, must not be below the level of subsistence of the worker.

Just wage is the legitimate fruit of work

They commit grave injustice who refuse to pay a just wage or who do not give it on due time and in proportion to the work done

A salary is the instrument that permits the laborer to gain accesses to the goods of the earth.

Reference:

• Cristobal M. Pagoso, Rosemary P. DinioUpdated Edition, Labor Economics

• J.R. Hicks, 1932, 2nd ed., 1963. The Theory of Wages. London: Macmillan.

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