Government Wage Policy, Wage Determination, and the Development Process: A Case Study of Tanzania
Valentine, Theodore Rudolph
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https://hdl.handle.net/2142/70727
Description
Title
Government Wage Policy, Wage Determination, and the Development Process: A Case Study of Tanzania
Author(s)
Valentine, Theodore Rudolph
Issue Date
1982
Department of Study
Economics
Discipline
Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, General
Abstract
This is a study of the role of government wage policy (GWP) in economic development and labor market behavior with special reference to Tanzania. GWP includes not only direct action on wages, but legal and institutional changes which indirectly affect labor market processes and industrial relations.
After introduction (Chapter I), issues related to low-wage and high-wage approaches to economic development are discussed in detail in Chapter II. These two approaches are not mutually exclusive under all circumstances. Rather, the usefulness of each depends upon the nature of constraints on development that a country desires to remove. Chapter III examines GWP, wage and employment trends, and labor supplies in colonial Tanzania (1949-61). Explanations are offered on why the colonial government abandoned its traditional 'cheap labor' policy and how the change in wage policy increased real wages in the late 1950s. Fluctuations in wage employment are also examined.
Chapter IV is an analysis of GWP, wage and employment trends, and economic conditions in post-independence for three subperiods: 1961-67, 1967-72, and 1972-76. GWP changed from period to period. It is concluded that: the high-wage policy in 1961-67 was not responsible for the slow growth of wage employment during the same period; a more favorable employment trend after 1967 was not due to the shift to a different, low-wage policy; and GWP had little to do with the price instability in 1972-76 despite allegations of a wage-price spiral during this period. Chapter V describes the role of the government in shaping Tanzania's industrial-relations system. The government has undertaken extensive legal and institutional changes. As a result, the government has become dominant and the labor movement subservient in matters that affect labor's security and welfare in the workplace.
A comparative analysis of trends in Kenya, Tanzania, and Uganda in Chapter VI refutes the proposition, popular among economists, that rapid increases in real wages retard economic development. Contrary to a general 'imperative of wage restraint' stressed by many economists, this thesis argues that the merits of GWP in any country should be evaluated in close touch with the country's specific objectives and concrete realities.
Many misconceptions born of conventional economic analysis on the role of wages in economic development and employment expansion are exposed and expunged.
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