THEORIES ON

WAGES

A Report By:
Richard F. Fermocil
Theories on Wages
• Are explanations of wage rates and structures.
Wage Rate
Is 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.
Principle
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.
 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.
 Just Wage Theory
• 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
• 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. Dinio

Updated Edition, Labor Economics

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