Paper Title: Mapping Issues in Labor Economics: An Islamic Perspective for Research and Policy Development
Author: Mohd Nahar Mohd Arshad
Publisher: JKAU: Islamic Economics, Vol. 37 No. 1, 21 – 37.
The study illustrates the literature on labour economics from an Islamic perspective to identify the concentration of research, gaps in the literature, major difficulties to the development of the field, and how Islamic principles can guide policymaking in this area.
We are living in a capitalist society where wealth is circulated mostly among the rich. This creates systematic inequality and this issue continues to further exacerbate the hardships faced by the workers. There are various studies on Islamic banking and finance, but the labour side of Islamic economics is not much focused upon and the number of research studies are limited. The purpose of this study as explained by the author is to explore the progress made in labour economics from an Islamic perspective, especially in advancing policies that can improve the well-being of workers.
Three important elements have been identified in this paper in labour economics from an Islamic perspective: religious or cultural, behavioural, and systemic aspects. The religious aspect involves the direct interpretation and/or implementation of Islamic principles, rulings, and behavioural norms derived from the divine texts in labour economics. The role of culture (‘urf) may have an effect on how religious texts are interpreted, which in turn shapes religious views.
The behavioural aspect is concerned with the role of individual behavior, ethics, and morality in shaping labour market outcomes. The systemic aspect is about the shortcomings or loopholes in the economic system that cause problems in the labour market, such as poverty, unemployment, and inequality. The study identified three main directions of research in labour economics from an Islamic perspective: (i) Islamic work ethics, (ii) Islamic labour markets, and (iii) Islamic labour policies. Most of the literature is mainly concentrated on addressing Islamic work ethics.
The study has discovered many gaps in the literature. There is a lack of theoretical development, empirical analysis, and policy recommendations from an Islamic perspective. Most of the literature is conceptual, focusing on normative behavioural aspects of the economic agents in the job market without depth of theoretical support.
Empirical evidence is scattered, making it difficult to fully understand many labour issues to guide policy making. Future researches, therefore, should focus on bridging the identified gaps by developing theoretical frameworks, conducting empirical studies, and formulating policy recommendations that are grounded in Islamic principles. Interdisciplinary research involving experts from different disciplines such as economists, sociologists, and theologians should also be considered. This could further enrich the understanding of labour economics from an Islamic perspective.
There are other issues which can be taken up in future researches which are not highlighted in the paper. For instance:
Due to multiplicity of motives and urge for pure altruism, the backward bending labour supply curve can be studied in Islamic economics.
Likewise, how profit sharing contracts can enable the workers to share in profits as well in the form of Mudarabah and Musharakah.
How Islamic social finance can be used to provide necessary financial capital to the workers so that they can become entrepreneurs.
How Islamic redistributive institutions can check wealth and income inequality and also incentivize productive investments so that more jobs are created for the workers.
Categories: Articles on Islamic Economics, Research Paper in Focus