This study provides an overview of several theories on wage from a macroeconomic perspective, and surveys the established body of empirical literature so as to enhance the reader’s understanding of wage fluctuation. The just price theory provides a classical paradigm on wage. The concept of just price dates back to the medieval age when the church and the government decided and enforced what they thought to be fair prices for goods and services. The concept of minimum wage today is often justified on the basis of Cost-of-living-index theory, but it still retains elements of the just price theory in that it is determined and enforced by the government.
The subsistence theory holds that the price of labor is determined naturally, while the wage–fund theory examines what factors decide the short-term market price of labor. The marginal productivity theory holds the supply of labor as fixed and only demand as mutable, arguing that employers have a propensity to hire an increasing number of employees as long as the amount of revenue generated by employees remains greater than the total amount of wages paid to employees. The full employment theory aspires to simulate perfect employment and high wage, but tends to deal a short shrift to the correlation between cost and price. The collective bargaining theory represents a realistic modification of the marginal productivity theory, and is actually used to explain the behavioral patterns of both labor and management. The neo-Keynesian theory emphasizes the decision-making processes of both employers and employees (unions). There is also a structuralist theory of wage and employment. All these theories possess at least some degree of cogency, but we should keep in mind that it is impossible to explain wage and employment as a function of only a single factor.
The wages that businesses or organizations pay their employees are determined on the basis of multiple factors, including the average wage, the living wage, labor productivity, payment capacity, price indices, and labor supply. In particular, the rate of increase in labor productivity and the rate of increase in wage are closely correlated to each other. Wages should be increased within the limits set by labor productivity in the interest of price stability and trade balance. Some object to raising wages, citing the theory of international competitiveness. However, our more pressing task should be improving the management techniques and practices of businesses so as to minimize wastes of labor and maximize technological progress.
In conclusion, it is wrong to focus solely on the cooperative aspects of labor-management relations while neglecting the conflictual aspects. We need a better channel or forum for dialogue to solve labor-management conflicts. We need to outgrow our New Village Movement-perspective on labor-management relations, and start looking for ways to upgrade and modernize industrial relations and related systems in Korea. Labor and management should both cultivate a sense of shared destiny and community through hard work, self-help, and cooperation. They need to increase the size of the pie by enhancing productivity, and decide how most fairly to divide that pie.
임금과 노사관계(Wage and labor-management relations)
|Series Title; No||연구총서 / 19|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Social Development < Employment|
|Holding||KDI; KDI School|