Volume V: Economy, Politics, and Environmental Governance

Integrating Compensating Wage Differential Theory and Maqashid Shariah in the Determination of Wages for High-Risk Workers: Towards an Islamic Labor Compensation Framework

  • Ahmad Miftahuddin UIN Sunan Gunung Djati Bandung, Indonesia

Keywords

Compensating Wage Differential; Maqashid Shariah; High-Risk Workers; Wage Determination; Islamic Labor Economics.

Abstract

This study examines the integration of compensating wage differential (CWD) theory and maqashid shariah in the determination of wages for high-risk workers. The central problem addressed in this research arises from the inequities embedded in modern wage systems, which tend to treat occupational risk merely as an economic commodity mediated through labor-market mechanisms. In practice, workers in hazardous sectors— such as mining, construction, oil and gas, healthcare, and the informal economy—frequently confront substantial occupational risks without adequate protection or compensation. Although CWD theory accounts for the relationship between occupational risk and additional wage compensation, the approach remains essentially utilitarian and pays limited attention to the moral dimension, social justice, and the protection of human life. Against this backdrop, the study aims to develop an integrative, maqashid-based model of wage determination for high-risk workers. Methodologically, it adopts a qualitative conceptual approach, employing an integrative literature review that draws on labor economics, Islamic economics, and classical Islamic scholarship. The analysis combines thematic analysis, a maqashid shariah approach, and comparative analysis. The findings indicate that an Islamic compensation system should integrate five principal components: basic wage, risk compensation, welfare protection, a spiritual–ethical dimension, and occupational safety obligation. On this basis, the study advances a conceptual Islamic Risk Compensation Framework as a theoretical contribution to the development of Islamic labor economics. In practical terms, the proposed model may serve as a foundation for designing fairer, more humane, and more sustainable wage policies for high-risk workers in Muslim-majority countries such as Indonesia.

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