The Form of Wage Policy in Developing Countries

Abstract

A consideration of the form of a wage policy, which consists of an enquiry into the principles on which (a) the general wage level and (b) the wage structure should be based, has much logical appeal. In the conditions found in developing countries, however, this would be unsuitable. In such economies, the notion of the ‘general wage level’ — a term used frequently in developed economies — has little significance. Not only is this because there are normally wide disparities in labour incomes between occupations, firms, industries and regions, but also on account of the fact that the various wage and salary rates do not move together nearly as closely as they do in developed economies — a feature of developing countries succinctly described by Prof. Reynolds.¹