The Wage Structure and Determinants In the Palestinian Industry and Their Impact on Competitiveness

The importance of this study comes through wages and labor cost (production cost) which are composing an important rate in production cost of Palestinian Industry. It registered 16.8% of the total of production cost and occupied the second grade in 1999. Therefore, it plays a basic role in determining competition power for the Palestinian produce. This study is aiming at assessing wage function and wage efficiency function in the Palestinian Industry to be acquainted with the impact of labor’s productivity and his share in the capital. To achieve study objectives, the author had analyzed the main economic indicators that linked to wage and its existing interrelations by using the description method based on industrial survey findings released by PCBS for the periods between (1994- 2002) while the qualitative analysis was based on the assessment of wage function and wage efficiency function by regression analysis of the raw data of industrial survey of 1999. The final findings of this study of 1999 shows a different in wage average between male laborers and female laborers in industry in favor to male laborers with an increase reached to 57% of the female wages. There is also variations in wage average according to kind of work, where workers in the administrative jobs are receiving wages higher than those who work in the production with an increase reached 86%. In addition, there is a variation in wage average in the various industrial activities. It is noticed that an increase in the laborers productivity in Palestinian Industries with a rate of 271% of their wage average. The most important results of estimated wage function was represented in the decrease of the impact of each laborers productivity and their share in the capital from the wage average in industry as a whole, where this impact which represented 20.1% and 6% respectively. The difference in the impact of laborers productivity and their share in the capital was clear on the laborers wage according to various industrial activities, which reflects the differences in the nature of these industrial activities and the surrounding environment. As for the estimated results of wage efficiency function, there is an obvious positive impact of wages on laborers productivity in Palestinian industry, where the rate of impact reached 8.6% with a difference in this impact according to the economic activity. It is worthy to mention that there are other factors which have impact on laborers wage, in addition to their productivity and capital share, and they are presented basically in the characteristics of the laborers & land lords which requires to implement a special survey as attached with the annual industrial survey which is done by Palestinian Central Bureau of Statistics (PCBS) to enable us to study the various factors and determinants that affect the laborers wages in Palestinian industry in more comprehensive way. According to the final results of the study, I have summed up the following recommendations that are aiming at improving the productivity level and improving competitiveness power which affects laborers’ wages. And these recommendations are as follows: Developing effective administrative regulations adopting regulations of wages to matching with the nature of the these industrial establishments and the changes in living standards through abiding to the Palestinian Labor Law, increasing their human capital (training and vocational rehabilitation), in addition to applying the Total Quality Management (TQM) and the ISO regulations. Industrial Associations must play their roles. Applying and encouraging a taxation policy for investment purposes in the Palestinian industry. Focusing on capital as aiming to reduce production cost, producing more quantities of goods with high quality a long with improving skills of laborers and training them on suitable modern equipments, tools and technology which are necessary to the production process specially to labor intensive industries. And encouraging self expansion or amalgamation between small industries which leads to increase laborers productivity and their wages so far due to the impact it may be accomplished by these establishments through it’s savings of the volume. Besides to other policies to improve the environment of work in the Palestinian industry.