An approach to calculate ‘Fair’ prices and wages

Author: 
Ruud Bronkhorst
Publication Date: 
2004
Summary: 
The Fair Trade movement often claims to pay the producer a ‘fair price’ for his products. There is no uniform economic definition of the word ‘fair’ however, with as a consequence that the word is meaningless. This article gives some approaches how to define ‘fair price’ in India, starting with the calculation of ‘fair wages’. Then the approach is applied to other countries as well.
Abstract: 
The Fair Trade movement often claims to pay the producer a ‘fair price’ for his products. There is no uniform economic definition of the word ‘fair’ however, with as a consequence that the word is meaningless. This article gives some approaches how to define ‘fair price’ in India, starting with the calculation of ‘fair wages’. A method is developed to calculate minimum fair wages and prices for the unorganised sector, where there are no trade-unions to represent the workers in their negotiations. Then the approach is applied to other countries as well.