Business Studies – 6.4.1 Ethical issues | e-Consult

The statement that paying fair wages is purely an economic decision and has no ethical implications is demonstrably false. While economic factors certainly influence wage levels, there are strong ethical arguments for paying employees a fair wage.

Ethical arguments for fair wages include:

• Human dignity: A fair wage allows employees to meet their basic needs and live with dignity. It recognizes their contribution to the company's success.
• Social justice: Significant wage disparities can exacerbate social inequality. Fair wages contribute to a more just and equitable society.
• Employee well-being: Fair wages reduce stress and improve employee morale, leading to increased productivity and loyalty.
• Moral obligation: Many believe that employers have a moral obligation to treat their employees fairly, regardless of economic considerations.

Employer perspectives often focus on economic factors:

• Profitability: Employers must consider their profitability when determining wage levels. They need to remain competitive in the market.
• Cost of labour: Wages are a significant cost for businesses. Employers must balance the cost of labour with the value of employee contributions.
• Competitiveness: Employers need to be competitive with other businesses in their industry to attract and retain employees.

However, even from an economic perspective, paying fair wages can be beneficial. It can lead to increased productivity, reduced employee turnover, and improved company reputation. Therefore, while economic considerations are important, ethical considerations should also play a significant role in wage determination. Ignoring the ethical implications of wage levels can damage a company's reputation and lead to negative consequences.