i. THE PRICING (WAGES AND SALARIES) IN CONVENTIONAL AND ISLAMIC ECONOMICS .ii. SIMILARITIES AND DIFFERENCES THE PRICING OF LABOR BETWEEN ISLAMIC AND

CONVENTIONAL.iii. PRICE FACTOR AND JUSTICE IN DISTRIBUTION OF INCOME IN ISLAMIC ECONOMIC

MEIMI ANAK DARAN (BB11110312)MALISSAH BINTI ZAKARIAH (BB11110301)ARNITA BINTI BUBUNG (BB11110060)

BH 30603LABOR IN ISLAMIC PERSPECTIVE

PRICE (WAGE AND SALARY) DITERMINE

CONVENTIONAL ECONOMIC

ISLAMIC ECONOMIC

CONVENTIONAL ECONOMIC

• Example of economic conventional – capitalism and socialism.

• is one of the system that mostly use by the other country in this world.

• price level determine by the market power which influence by the power of labor demand (Dᴸ) and power of labor supply (Sᴸ).

• when the demand of labor equal to supply of labor, the equilibrium price of labor will been determine.

PRICE OF LABOR CAN BE DETERMINE BY CURVEWage

Quantity of Labor

Dᴸ Sᴸ

0

W

L

Price of Labor Curve

In conventional economic, labor always ask for the minimum wage, which is the wage is higher than equilibrium wage – use to protect the labor to get high wage.

While employer always ask for the maximum wage, which is the wage is lower than equilibrium wage – employer try to minimum there cost in production to maximize there profit.

In conventional economic labor and employer try to make there own profit.

Government will interrupt when they are any problem happened in determine the wage or salary.

ISLAMIC ECONOMIC• The price of labor (wage and salary) are been determine according to the laws that

state in Al-Quran and Sunah.

• In Islam, wage is a compensation and consideration for worker at one it is there rights by upholding the value of justice and eligibility by help or energy that already been given by the employee.

• Hiring policy – in conceptual in Islam the basis to determine the price of labor is depend on worker service, not the energy that given in work. Beside that, they are also depend on the eligibility, justice and welfare.

• Hiring system - can be categories in three cluster :

• Wage system depend on time.

• Wage system depend on productivity

• Wholesale wage system

• Minimum wage level are determine to protect the welfare of workers and their right.

• Minimum wage also determine base on changing need of the peasant, so that there welfare or there needs are reserved.

• Beside that, the different between wage also due to differences in organizational profitability, employee productivity levels, and more

• According to principal of justice in Islam, wages fixed by agreement between the employer and employees to take care of their own benefit.

• In Islam the salaries are too low to affect the welfare of the workers are not allowed, at the same time Islam will not raise wages above productivity levels that can be produce by employees.

• Increase in the wages that exceed the limits are not necessary, at least the wage that worker received are able to meet the needs of workers and their families.

SIMILARITIES AND DIFFERENCES BETWEEN LABOUR PRICE FIXING THE ISLAMIC AND CONVENTIONAL LABOUR

SIMILARITY

• 1. The system of wages in an Islamic economy is the fix wage system (where wages are fixed on the basis of some pre-decided criteria on instead of the equilibrium of the demand and supply

• 2. Wages must be fixed differently for different professions taking into consideration the risk to life and health. Differential wage policy is allowed for different jobs. Islam appreciates skill and experience.

• 3. Wage determination in Islam although it depends on the quality as physical, skills, training and mental state, but there are other considerations which aspects of the labor needs to sustain himself and his family.

• In the United States the country with a market economy system, the principle is applied in the form of the imposition of a minimum wage policy.

• 4. Islam does not allow wages are below the minimum level set based on the basic needs of employee groups, but Islam does not tolerate the wage increases beyond a certain level determined by its contribution to the production

DEFERENCE BETWEEN LABOR PRICE FIXING ISLAMIC AND CONVENTIONAL LABOR

Islamic

• 1. A pre- decided wage is a necessary condition. The work, wage and duration must be pre-determined and the nature of the work must be legal

Conventional

• All types of employment permitted. Salaries and wages paid by the job done some of the jobs that are prohibited in Islam as stealing, prostitution, etc.

Islamic

• 2. Professor Benham in Afzalurrahman, 1991: "Wages can be defined as the amount of money paid under the agreement or contract by a joint owner on an employee for services that it provided".

• Wages are the consideration received for his work in the form of a material consideration in the world (Fair and Qualified) and in the form of reward in return for akhirat (better consideration).

Conventional

• 2. Wages in accordance with the Western meaning associated with not giving consideration to regular employees, past or labor, such as labor wages last in oil palm plantations, buildings wages paid weekly or even daily.

• While wages in accordance with the Western meaning associated with monetary rewards (financial) received by the employee or a regular employee and paid monthly. Up in the western sense, salary and wage discrepancy lies in the type of employees (permanent or temporary) and the system of payment (monthly or daily).

Islamic

• 3. On the contrary Islam prefers wages to be determined through musyawarah which can be interpreted as a bargaining process between employer and employee in the labor market. Another Islamic principle that wages should at least satisfy the basic living requirements is not inconsistent with a market system and thus can be implemented. However, its implementation in an Islamic economy may be expected to differ from that practiced in a capitalist economy.

Conventional

• 3. wages are de termined by competitive forces of supply and demand. A manufac turer, after very careful plan ning, concludes that he can make and sell so many of a particular item at a given price

Islamic

• 4. A way wages are set each party to share in the legitimate product.In addition both the contracting parties were ordered to be fair to all the people who transact

Conventional

• 4. Capitalist and socialist people differ in determining wages, giving workers the capitalist wage to a worker with a reasonable wage. Fair wages according to them is what is needed by a worker with a minimum cost of living.

• They will increase the wages of his life when the load increases on the limits of the most minimal, limited to the most minimal standards that can be used to simply live in a very modest standard of living where he is not the standard of production resulting

CONCEPT OF DISTRIBUTION IN ISLAMIC ECONOMIC

• All the property and the natural resources belongs to God that should exploited by humans in any economic activity.

• Humans who are directly involved in economic activities will receive a wage, rent and profit.

• They are not directly involved in economic activity will also receive the infak in the form of gifts, Zakat, sadaqah, donation, inheritance (Harta pusaka), Wakaf and so on.

• Because of the failure in the distribution of responsibilities can be cause the poverty, unemployment and starvation in people's lives.

• Distribution not only as a sign of gratitude to God about sustenance and giving, but more than that as a test to human either they are obedient and disobedient, grateful or greedy.

DEFINITION OF DISTRIBUTION

• By Afzalur Rahman (1985: 55), distribution is the study of how

income and wealth distributed among various factors of

production contribute to obtaining wealth.

The importance of Distribution in Islamic Economic

• The failure in distributed of property can give the gaps of the large separation

exist in society between the rich and the poor.

• Islam aims to create unity among the human beings and not exist the split on different classes in humans

• Therefore Islam wants to wealth distribute (mobilize) perfectly so it is not monopolized by the rich only and to protect the economic interests of those who are less fortunate.

• Islamic economics also trying to create a caring nature for those not directly involved in economic activities caused by disability, health, etc.

• Islamic economics try to reduce the influence of wealth in the human soul so that with every resource wealth, people not forget the responsibility, arrogant, greed and sink with luxury.

PRINCIPLES OF DISTRIBUTION1. Fair

• Fair is balance. It also means that the right has to be given to them.

• In the context of Islamic economics, an individual right in terms of property depends on the contribution of economic activities to acquire property within the limits as much as possible with syarak.

2. Ihsan

• Ihsan is a granting from a wealthy to the needy such as the poor, disabled, widows and orphans.

• Ihsan can be in the form of zakat, sadaqah, kaffarah, faraid, gifts, donations and etc.

• It can help narrow the income gap between the rich and the poor.

METHOD OF DISTRIBUTION

1. Distribution of ownership

• Private Property Every person is entitled to possess the property from outcomes of their efforts as long

as it does not conflict with Islamic law such as stealing, cheating, taking usury, looting and not give harm to others.

It also may have something by giving someone else in the form of a gift. Similarly ownership through faraid and also giving by government.

• Public Property The property has a public benefit jointly owned by the community and individuals are

prohibited from have it. Public property that is like fire, water, land, oil, gas, minerals, rivers, mosques,

schools, halls and hospitals that is used to give benefits to the general public.

• State Property

It is a property that is managed and supervised by the government such as state-owned property of Bait al-Mal in the form of al-fai’, jizyah, ghanimah, kaffarah, a will (wasiat), waqaf, nazar, luqatah and property no heirs.

Zakat managed by the government for eight groups determined by Islamic law.

In the public ownership of property will also become the country ownership with the government's role to give ownership to the individual or organization to commit certain economic activities such as land for farming, mining, residential, roads and so on.

2. Primary RightIndividual entitled to own property through directly activities in the

production process such as work, lease or exchange. The human work uses the intelligence brain and physical strength to

get the own property and benefits of the property that can be used to fulfill their needs for goods and services.

3. Complementary RightsIndividual's right to acquire indirectly property giving from the others

outcomes after it is completely unable to fulfill their own needs through donations, grants, gifts, wakaf,, etc.

Prevention to ensure proper flow properties occur. this is done an integrated manner through the prohibition of acquiring the property through the practice of usury, corruption, black market, the freezing of property, waste, gambling, speculation, monopoly, fraud or foreclosure.

This economic activity is viewed negatively by islam because it harms the economic stability of the country because of the socio-economic gaps between the rich and the poor that can be reduce capital, reducing the production of goods and services, increasing unemployment and reduced purchasing power.

4. PROPERTY FRAUD PREVENTION ( PENCEGAHAN PENYELEWENGAN HARTA)

CONCLUSION • Another Islamic principle that wages should at least satisfy the basic

living requirements is not inconsistent with a market system and thus can be implemented. However, its implementation in an Islamic economy may be expected to differ from that practiced in a conventional economy.

• Islam teaches cooperation and economic equality in society. All expenses are good value to others with sincere and voluntary will receive rewards from Allah and make one man who is responsible and to prevent excessive individualism nature.