The Waging (Remuneration) System

Author: Prof. Muhammad

(Chairman of Sekolah Tinggi Ekonomi Islam (STEI)Yogyakarta)

In Islam, Wage is also called “ujrah”. Wage is a compensation over service given by worker. To further insight of thorough definition of wage in Islam, we shall see chapter At Taubah (The Repentance) :105, which can be translated as, “And tell them, (O Prophet): “Keep working: Allah will behold your works and so will His Messenger and the believers; and you shall be brought back to Him Who knows that which is beyond the reach of perception and that which is within the reach of perception. He will then declare to you all that you have been doing.” And chapter An Nahl/The Bee: 97, which can be translated as, “Whosoever acts righteously – whether a man or a woman – and embraces belief, We will surely grant him a good life; and will surely grant such persons their reward according to the best of their deeds.”

In his book of tafseer, “Tafseer Al Misbah”, Quraish Shihab explained chapter At Taubah: 105 as follows, “Work for Allah only, with various kind of righteous and beneficial deed, for you or society. Allah will see it, i.e., value it and reward you for it.” The meaning of reward here is wage or compensation.

Likewise, in chapter An Nahl:97, the meaning of “reward” in it is wage or compensation. Thus, in Islam, if a person does a work because of Allah (righteous work/deed), he’ll earn some reward in this world (of wage) and in the Hereafter (of reward) which is multiplied. From these verses, we may conclude that in Islamic perspective, wage has two aspects; worldly and beyond.

Process of determining wage in Islam comes from two factors; objective and subjective. Objectively means that wage is decided after taking into account the level of wage at the labour market. Whereas subjectively means wage is decided after going through social considerations. What meant by social considerations is humanity values of worker. Up until today, the concept of conventional economy believes that wage is determined by consideration of level of wage at the market. For example, how to pay the wage. From Abdullah Ibn Umar, The Messenger of Allah -peace and prayer of Allah be upon him- said, “Give the worker his wage before his sweat dries.” (Narrated by Ibn Maja and Imam Thabrani).

From this hadith, we can see how Islam values humanity. It is different with conventional concept which barely sees human being as a capital. Human being shouldn’t be treated as capital, such as machine.

Sadeeq (1992) mentioned some requirements that’ll ensure proper treatment to worker, namely: (1) The relationship between an employer (musta’jir) and his worker (ajir) is a man to man brotherly relationship, i.e., brotherhood. (2) Workload and its environment shall take into account humanity values. As noted earlier, human being is not a capital. Human needs time to rest, socialize, and the most important of it, to pray. (3) The level of minimum wage shall satisfy the basic needs of the worker.

Implementation of humanity values in determination of wage in Islam originates from two sources, namely; (1) Musta’jir or employer, and (2) Government. Faithful employer will apply humanity values in determining the wage of his employee, and fairness is one of the humanity values.

The meaning of fairness is as revealed by Yusuf Qardhawi in his book, Values and Morality Message in Islamic Economy. He explained, “Indeed, a worker is only rightful of his wage after he had completed his job appropriately and according to agreement, because the muslims are bound with stipulations among them, except stipulation that forbids the lawful or legalize the unlawful. But if he skips work without acceptable reason or deliberately work it inappropriately, it should be accounted for him (his wage should be reduced), because every right follows by obligation. As long as he receives full wage, he should fulfill his obligation. This ought to be explained in detail in “working rules” which explains the rights and obligations of both parties.”

Thus, the meaning of fairness is that it shall be a clear understanding or contract (agreement) between an employer and an employee. An employer should be fair and strict during the process of determining the wage. Right of an employee (wage) will be given after he completed his obligation (work) first. On implementation of the value of fairness, the government works to intervene the wage-determining process. Its intervention is based on two things: (1) The obligation to supervise, protect, and correct the implementation of Islamic values in society life, including the policy about wage; (2) The obligation of the government to maintain fairness and prosperity of its people, that includes both employer and employee.

In Islam, market intervention basically only exerts temporary effect. Government will intervene the market if it is distorted thus the level of wage in it is not a fair one.

Thus, it can be concluded from all earlier explanations that in determining wage, Islam highly uphold humanity values of workers. Up until today, rights of workers have always been sidelined. In East Asian model, for instance, rights of worker are not protected. Their wage are so low, insufficient to fulfill their and their families needs. This highly contradicts Islamic concept, because one of the requirements of determining wage is fairness. Fairness is not only seen from the perspective of worker, but also from the perspective of employer. Therefore, Islam doesn’t justify determination of wage that only consider the welfare of worker. Rather, it implores that the welfare of employer should also taken into account.

Islam offers some alternatives if determination of wage through market mechanism and government’s minimum wage policy do not work properly. The alternatives are: (1) Giving subsidy to the producer. The subsidy is meant to help the producer to be able to keep giving proper wage to the worker. (2) Giving subsidy to the worker. To be exact, it is a kind of social security, Thus, worker will still get wage as in the current market policy, but they also get social security as a form of government’s attention towards their welfare.

In practical level, government may use the fund from bait al mal (country’s fund). For example, during the reign of Umar, subsidies were given as (1) Individual share; and (2) Continuing Annual cash subsidy for those who were join the jihad.

Minimum Wage or Salary

Because of the fluctuation of price of the main needs (i.e., inflation and deflation), limit of minimum wage is supposed to be adjusted to the rate of real inflation. Minimum wage system that is related to the level of inflation is currently applied in our country. In Indonesia, to determine the provincial minimum wage, there are several elements to consider, which comprise food, clothes, and housing, etc (there are 43 points such as mentioned in the published letter of Minister of Labour and Transmigration No. No. 889 HK. 01.32.2002 dated10th September 2002). Main needs that are calculated in this letter is the main needs of a single, unmarried worker.

If the need is to rent a house, a worker will never be able to own a house. This is clearly against a hadith of the Prophet, narrated by Mustawrid Ibn Syadad: “I heard Prophet Muhammad -peace and prayer of Allah be upon him- said, “Whoever becomes a worker to help us, then we shall find a wife for him; a servant if he doesn’t have any, and if he doesn’t have a house, he (the employer) shall find a house for him.” Abu Bakr said, “It is narrated to me that Prophet Muhammad -peace and prayer of Allah be upon him- said, ‘Whoever takes another path than what mentioned above, is being unreasonable or a thief.” (Narrated by Abu Daud).

It is true that there are various meaning for the phrase “finding for him” , such as renting a house for worker to live in, or buying house for him to reside in, or, providing free housing (as official residence) for him. In Indonesia, the realization may come as free housing for the lower class employees, such as modest houses for plantation workers, or dormitory for police and national army officers. As for the higher class employee, the employer may provide them with official residence for department official echelon two or higher, etc.

In my opinion, the meaning of “finding” is to provide permanent house for worker. Since the contrary means the worker will forever rent a house and never having it on his own. The simplest way is by installments, which is of course not to be accommodated for all employees, but at least for those who have worked for at least five years with the reason that they’ve been loyal to the company.

Therefore, there must be an instrument to regulate the remuneration in form of Guidebook of Remuneration for Employees in a company. It shall contain a regulation that states that housing is provided in installment payment method for employee who have worked for five years. Regarding this point, it is suggested that the necessity item of “house renting” on point twelve is replaced with “house installment” which is exclusively provided for employee who has worked for > 5 years. The difference between house renting and installment shall not be too wide, so that the workers might become more industrious to meet it and in turn improve their productivity.

The employees’ health is a also of a major concern, as it serves as their working asset. Every job (work) needs preparation in terms of healthy body and soul, and working is a must, or even a must for a living. Thus, health becomes a compulsory issue. It is compulsory for human being to meet its primary need of food and drink, hence an employee will not be able to work and meet his need except if he has strength to do so. And strength in this context means health, thus, in Islam, it is obligatory for employer or company to pay attention to the health of its employee.

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