Theory of Fair Wage Setting (TFWS)

Abstract

It has been more than two hundred years many theories related wage determination from supply-side (economics) and demand-side (industrial relation) have been introduced but all are criticized still, no satisfactory wage theory is introduced because markets do not work in reality as the theories assumed to be, on ground reality markets are segmented and complex, there are also many other factors beyond the supply and demand of labour, custom and culture that are determined and influence wages. TFWS matches with real world behaviour and human nature and contributes. To fill gaps this study aims to come out with a new theory name fair wage setting theory (TFWS). To achieve the objective, qualitative research is used while Semi-structured interviews were conducted by applying snowball sampling technique. Previous literature was also treated as a secondary data. This study reveals that, existing general wage determination and minimum wage criteria are the rooted issues that further creates problems like hours of work, union, debt behaviour, productivity and training, youth, taxes, pay settlements, benefits system, nature of non-compliance, employment, informality, income inequality or poverty gender pay gaps etc. To set the fair wage rate, role of timely paid wage, court of employee and employer and government involvement are compulsory. TFWS divided wage determination into parts which are “fix wage” that includes living cost on the economic level and other is the “variable wage” that includes employee contribution. TFWS is significant as it based on the real world. More present study contributes, socially, politically, ethically and economically on global level.