ETHICS AND MANAGEMENT

 FAIR WAGE

Assumed Facts:  The global crisis has weakened Philippine economy, causing the CHEHOMA , a corporation operating for ten years, unpaid debts due to the bank.  The bank’s letter of notice informed the corporation of a take over in the event of non-payment.  The Corporation decided to cut down expenses by having a mass lay-off of employees.  A dialogue was initiated by the employees who said that they prefer a salary below minimum wage than to lose their jobs.  However, the management told them that this is against the law and the company might face a criminal offense.  The corporation told the employees that they would have to sign a document stating that they actually received the right wage to make it appear that the company is paying the right amount of wages to the employees.

Issues:  1.  Clearly the company violates the law when it allowed its employees to receive the wage below the minimum that the law requires.  Is this decision morally correct?  Why or why not?

2.    The employees insisted on what was legally wrong.  Is this action morally justified?

Ethical Dimensions/ Analysis/Judgement reasoning

(Consequentialis theory/Utilitarian theory)

Legal Ethics: to uphold the law

PD 442  Labor Code of the Philippines Book III, Title II Chapter 1 Wages

Article 7 (f)"Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished by the employer to the employee. "Fair and reasonable value" shall not include any profit to the employer, or to any person affiliated with the employer.

Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.

Art. 127. Non-diminution of benefits. No wage order issued by any regional board shall provide for wage rates lower than the statutory minimum wage rates prescribed by Congress. (As amended by Republic Act No. 6727, June 9, 1989

(Kantian/ Deontological theory)

A.  Pope Leo XIII MAGNA CARTA OF SOCIAL RECONSTRUCTION= Encyclical rerum novarum= the most impassioned treatises ever written on the sacredness of work and dignity of the working person

 May 15 1891 (“Capital and Labor”) 

“let workers and employers…make any bargains they like and in particular agree freely about wages; nevertheless, there underlies a requirement of natural justice higher and older than any bargain voluntarily struck; the wage ought not to be in any way insufficient…if…a worker is forced to accept harder conditions imposed by any employer or contractor he is a victim of violence against which justice cries out.

B.  Pope Pius XI Quadragesimo Anno “On the Reconstruction of the Social Order” an encyclical on minimum wage

-advocated profit sharing and giving workers a say in company’s management

-heads of families should receive a wage sufficient enough to meet “ordinary” family needs

-family wage as one sufficient for a single wage earner to support a family

-American norm in the 1950’s and 1960’s, early 1970’s

C.  Pope John XXIII,   Pope Paul VI  on economic justice

MATER ET MAGISTRA “Mother and Teacher” 1961; Pope John XXIII

-call on government to reign in business abuses and to press for full employment policies

-focus on the widening gap between the rich and the poor

D.  Pope John Paul II  Laborem Exercens  “On Human Work”,

-encyclical letter on human work and duties of members of the church

-detailed assessment of just wages,  declaring workers have “fundamental rights” to health care insurance, suitable working conditions, and rest periods.

-wages should be sufficient so that women with children aren’t forces to work so “it should be possible for a mother to devote herself entirely to her children.

“Society and the state must ensure wage levels adequate for the maintenance of the worker and his family, including a certain amount for savings”

ANSWER:  The company’s decision is morally correct and the employees insistence on what is legally wrong is morally correct. 

The equitable distribution of income and wealth along the imperatives of economic and social development in connection with just compensation and fair wages is a current problem facing both domestic and global companies. The decisions of both parties (employer and employees) prevent job loss/unemployment resulting in other consequential societal problems like poverty, malnutrition and crimes. Neoclassical economic theory views workers as a means of production and competition as determining wages which are, in turn, aligned to productivity. The view of wage as a motivating force to improve productivity is present. Wages are determined also by the needs of workers to subsist and the company to survive and in time improve its productivity.

Using the Concept of Corporate Social Responsibility where activities are seen from a moral perspective, activities are for the promotion of the common good, protection of the individual’s interest, and the preservation of the human society in general. (Roa 2007).  Corporate Social responsibility used to mean profit maximization, then a trusteeship management.  Today it is called quality of life management. 

-Quality of life management involves the corporation’s participation in helping solve social and environmental problems in view of better resources of management.

- Economic justice prevails with the decisions of the employer and employees, the employees will receive a "living wage" for survival.

-establish harmony between business and public interest

-based on the teachings of Jesus Christ as taught in the bible

Countries without minimum wage.  Wages are determined through collective bargaining agreements:·  Austria; Finland; Iceland;  Italy; Norway; Singapore; Sweden