Employee and Wage

Employee and Wage: From Islamic Perspective (part 3 – finished)

Author: Prof. Muhammad
(Chairman of Sekolah Tinggi Ekonomi Islam (STEI)Yogyakarta)

Minimum Standard of Wage >_ Nishob of Zakat

In practical level, although the minimum wage has been measured thoroughly by taking into measure components of food, clothes, and housing as stated in a letter issued by Minister of Employment and Transmigration No. 889 HK. 01.32.2002, it is still short to cover the basic needs of employee, particularly in developing countries. The provincial minimum wage (Upah Minimum Provinsi or UMP) of DKI Jakarta in year 2000 was IDR 972.604,00 monthly (or equal to 71 euro), increase by 8% from the 2007 UMP of IDR 900.560,00. Compare it to the employee’s wage in Europe in 2004; In belgium, 1.210 euro, France 1.280 euro, and Netherlands 1.264 euro. The minimum wage in these three countries in 2004 was 17 times higher than the minimum wage of employee in Jakarta in 2008.

Sadeq (1989) recommended that if the minimum wage is not enough, the employee should receive some zakat. We agree with this opinion, and that is how it supposed to be. If the employees’ wage is not enough to cover his need, they can be categorized as poor men and deserve to receive zakat fund. But there should be certain mechanism that pertains to fulfill the employees needs. Generally, there should be a measure of how much the minimum wage that shall be given to employees.

In our opinion, the concept of minimum wage shall be fixed by introducing the concept of nishob of zakat as minimum wage. It means that if the nishob of zakat is adjusted with the price of 85 grams of gold in a year, then in a month, the minimum limit of wage is as 85/12 = 7,083 grams of gold. Thus, if the average price of one gram of gold throughout year 2007 was IDR 198.800, assuming that price was stable, the minimum wage or salary in 2008 will be as many as 7,083 x IDR 198.800,00 = IDR 1.408.100,00.

If the price of gold is fluctuating, adjustment of minimum wage could be done twice a year as what applied in Greece and Spain. In these countries, adjustment of minimum wage could be done once or twice a year, depends on the economic condition of the country. The Greece even applies adjustment of minimum wage twice in a year regularly.

The question is, where does the money to pay the minimum wage that is adjusted to the
nishob of zakat come from? Wont the businessmen refuse this rule if it is to be applied?

Basically this minimum wage that is based on the nishob of zakat could be applied as long as the production cost could be minimized. According to a study, averagely 40% of the average main price of product comes from bank’s interest and illegal fee, as reported by Agnes Swetta Pandia (Kompas newspaper, 22nd of October 2004), “The business world will still use the excuse of troubled economy due to the high economy cost caused by both legal and illegal taxes. If this illegal tax could be reduced thus the bank’s interest could have 30% from the main price of product, and the rest 10% (which is saved from the omission of illegal tax) could be given to the employees.

Proportion of worker cost is averagely 8% from the production cost. If the illegal tax is omitted, total cost for worker is 18% from production cost (10% from saving + 8% of current worker cost). Worker cost abroad is about 12-15% from production cost. If this saving happened by the omission of illegal tax, then there’ll be no difficulty to apply the nishob of zakat as the minimum standard of wage. The 18% is two times higher than 8%. It means that if the illegal tax could be erased, even if the employees receive twice the amount of their current wage, the company will still be able to pay it.

It is clear that employee or worker in developing countries really need certainty over protection of their rights. Indonesia, for example, adopts two models of policy over worker, namely the Latin America model and East Asia model. And the implementation of these models was done in two different periods; the New Orde and the Reformation Orde. Before the economy crisis, or at the period of New Orde, Indonesia tended to use the East Asia model, by neglecting the worker protection acts, reducing the role of federation of worker by the government, etc. Whereas today, the government uses the Latin model, by protecting labour in modern sector extensively, widely, or aggressively.

However, to tell the truth, the policy of minimum wage and aggressive protection of worker may harm the interest of majority of workers. The harms it could bring include the wider gap between worker in modern and traditional sectors, and development of working prospect in better jobs will slow down. Likewise, surplus of worker from traditional sector to modern sector will slow down. One thing that is really needed is the most effective policies of minimum wage and worker protection for all workers, whether those work in modern sector or the traditional sector.

In reality, utilization of these conventional concepts meet a deadlock, because it does have weaknesses. Therefore, Islam may offer an alternative solution to break trough the deadlock. For example, regarding the still many unfulfilled rights of the workers, and the low standard of workers’ welfare. Islam totally against these practices. In Islam, Allah the Glorified and Exalted has ensured human’s rights. Allah has given everything that we need to live on this earth; air to breath, water to drink, etc. If Allah has done so, then why there are still employer that doesn’t fulfill the rights of his employee?

From this point, we could see fundamental differences between Islamic view and conventional view. The differences are; (1) Islam views that wage has a huge relation with moral or humanity concept whereas conventional view doesn’t. (2) Wage in Islamic concept is not just material, rather, it also comprises dimension of Hereafter, which is called the reward, something that conventional view doesn’t have.

Islam is the solution to solve all problems in this world, and economy sector is no exception. Therefore, let us realize it together that it is time to return to the path of our religion, finding solution through it, and studying it wholly. Therefore, we’ll be more ready to live this problematic life.


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