Fair Wages and Business Ethics - Essay Example

When are Fair Wages According to Business Ethics? It is commonly expected and believed that all workers are en d to fair wages. One of the most highlighted ethical debates in business comprise of a concern on common practice perspective on whether wages should be evaluated in fair or unfair basis. Though many people spend time expressing their views on whether their wages are fair in relation to other people wages, supporters of free market views claim that views on fairness of wages are misguided because they should be based on various factors that are applicable in a free economy. There are certain approaches used in determining the wages of employees in the market such as “bargaining-based” approach as well as “comparison-based” approach. There are certain ethical issues involved in salary levels where concerns like whether the basic needs and the wage of the employee match. This paper attempts to outline the concept of fair wages in relation to business ethics and standards. The idea of fair wages is related to the fact that every person deserves a decent life, a wage that would at least enable one to survive and be able to save some income for resources that he needs. Distribution of resources should be just for every member and this area is commonly referred to as economic justice or distributive justice. Further many people argue that a society that is economically justice is one which provides its citizens with equal share of resources that can enable them to obtain basic necessities, get a proportionate share of his or her productive input in relation to the market demand. In a distributive justice, the employee is guaranteed of his wages and benefits after the negotiation that takes place between the employee and the employer and this leaves both parties with biding contracts that are supported by the law (Machan and Chesher, 2002). In job market, it is believed that the minimum wage is mostly determined by the employee. A minimum wage can be said to be the lowest amount of wage that an employee is will too accept prior to employment and this varies from one person to another. Employee A may be willing to work for a lower salary than employee B which would lead to differences in wages or an opportunity of getting employment. In such a scenario an employer cannot be accused of offering unfair wages to employee A as employee B gets higher salary. However, the employer could be accused of denying employee B employment due to the fact that he demanded higher wage than employee A. in such a scenario, it is evident that minimum and fair wage is mostly determined by the employee as he seeks for employment. If an employee is willing to accept low wages for his employment, then that should be considered as fair wage to him (Thomson, 2014). Many businesses and activities in the globe involve exchange of items where parties involved are expected to make bargains to ensure a favourable price or deal for both parties. Negotiation can be described as the act of discussing terms of the trade by both parties to ensure that both parties benefits from the deal. There are various skills and aspects that are involved in negotiation and bargaining since the art requires different kinds of approaches. This means it is the duty of the employee sometimes to negotiate for the wage that he or she feels serves the best interest of his employment. When one has the best skills and knowledge on a certain area of application, he has a bargaining power that should determine his wages through negotiation (Jennings, 2012). The issue of skilled labourers in the market plays a major role in determining wages. Employers demand employees to have marketable skills in different fields in order to achieve employment. This factor has led many people to engage in formal education and other kinds of training to get marketable skills for job market. The education level of possession of certain skills can lead to differences in wage levels in an organisation. Employers on the other hand take the advantage of unskilled labourers in the market to exploit workers due to their unskilled nature. Availability of many unskilled workers means that cheap labour can be obtained without much struggle. For instance the availability of many immigrants in US has affected the local workers because they work for low wages due to availability of huge cheap labour in the market (Kelly and Hawthorne, 2012). The problem of payment of low wages might not be the problem of the employer but the issue of demand and supply in the market. The prices go down when supply is too high and this can also be the attributed factor in the availability of more unskilled labourers in the market. The neo classical and classical theories state the ideology concept of “supply creating its own demand”. It indicates that total output value corresponds sum of the income generated from production prompting balanced production and consumption rate in an economy. During global recession, there was no balance in the production and consumption but rather a huge imbalance where the production seemed to outweigh the consumption due to difference in monetary policy. The spending rate decreased due to ideal concept of more savings from the consumers. The global recession is also opposed to New Keynesian and Monetarist theory of stabilisation of monetary policy based on government inflicted measures. The ideological concept of monetary control to ensure balance in fiscal policy and money supply through balancing the circulating currency and the production in the market was objected by the global recession event. The recession proved that money in circulation was imbalanced with production since the inflation rate was considerably high (Beesley, 2013). The fact that unskilled immigrants are involved in competition for jobs with the local underclass employees in US market. This has contributed to displacement of many US employees since the unskilled immigrants perform better in those tasks, as they are willing to work hard and maintain reputation even on the unpleasant jobs. They are also willing to accept low wages in exchange of the services in those industries. This gives immigrants an advantage over the local residents thus getting more employment opportunities. The impacts of immigration are experienced on labour supply in any market. Immigrants are known to increase the demand for consumable goods and services in all markets thus increasing the wage rates and the salary levels. This leads to shift in wage defends by employees within the industry and thus leading to polarisation of employment industry. While employment continues to grow, there is also a high growth reflected in the payrolls of employers and there are increased labour entrants in the same market (Bigu, 2013). Although employees play a major role in determining the fair wages they would want from an employer, there are other factors that are used to determine the wage of an employee. Several factors like the number of hours which the employee would be working, the length of employment terms, pay raises, prospects of advancement, work conditions, distance from home, safety/risks of the employment and benefits such as health plan, house benefits and sick days are some of the most common factors that determine the wage of and employee. In relation to these factors, what may be an acceptable wage to one employee may not be adequate for another. If two employees who working for two different companies and are subjected to different employment conditions get a $50 per hour, one may feel inadequate because he may be having different wage factors like long distance from work or high work demand that would limit his working hours. For such an employee, the $50 per hour may not be adequate while the other employee from the other company may be satisfied with the wage as it does not include other factors that limit the wage (Shaw, 2011).  There are two approaches to how wages should be allocated and they are based on how wages are determined. The first approach is based on the bargaining and negotiation between the employee and the employer. The “bargain-based” approach is based on the fact that wages are as a result of interplay that occurs between supply and demand. The outcome of the transaction is not always acceptable as one party may be disadvantaged in line with ethical aspect. There are three situations where the outcome or results of the transaction may become unacceptable or may attract debate on ethical grounds. The first situation involves a scenario where one party may be constrained to accept and agree on the terms of transaction and this involves the physical pressure exerted on the party to agree on such terms (McCune, 2013). The second situation is that transaction can only be considered ethically right if the market is defined by fair competition. Further, the fact that the asymmetry information condition where one of the parties involved in the transaction may possess more information than the other party that resulting to ethical question on the outcome of transaction and thus single party should not have more information that the other. Through this approach, the fair or just wage is determined on the agreement of the two parties after negotiation. The other approach is “comparison-based approach” which entails the comparison of wages of employees. Some wages may be too high or too low which triggers the question on what should be the fair wage? The approach attempts to explain that employees earn wages in relation to what they merit which does not match the ethical requirements of fairness and justice (Duska, 2007). Inflation further brings effects on wage demands and inflation expectation. Inflation and increase in prices of commodities leads to rises of wage demands while people try to maintain their living standards and cope with the rising prices of goods. Rise in wage demands leads to a situation described as “wage-price spiral”. This process brings imbalances in currency flow and distribution of income and wealth as some employees benefit from this process while others do not. In some cases the effects leads to continuous loss of value for the currency since once the inflation rate goes down many products retain the same price thus the currency continues to depreciate with time. It is difficult to determine what the fair wages should be when the inflation hits as factors of demand change (Bloom, 2011). In conclusion, fair wages are difficult to determine but through ethical standards, employees are entitled to get wages that can help meet their basis requirements and be able to survive in life. Fair wages can be determined by the employee through bargaining or by employer comparing the wages of employees in relation to their merit on wages. There are factors like, skills, work conditions, working hours and employee benefits that play a major role in determining the wages of employees. Skilled and unskilled worker get different wages due to their ability to carry out jobs and negotiation is required in determining the fair wage of an employee. 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