Iceland has no minimum wage. Instead, employers negotiate salaries with collecti

Question

Iceland has no minimum wage. Instead, employers negotiate salaries with collective groups or unions who represent the employees.   You must be 18 to work full-time in Iceland. However, mandatory school ends at age 16 and teen workers between the ages of 15 and 18 are highly unemployed. Salaries are high in Iceland because of the small population, universal health care, the high cost of living, and the fact that 88% of the population lives in and around the capital, Reykjavik.  Still it is one of the poorest countries in Europe.  

Youth unemployment is extremely high. Josh has discovered that if he hires young people between the ages of (15-18) part-time or no more than 40 hours a week, he can negotiate a much lower salary. The average salary amounts to $12.50 an hour.. Josh staffs young people exclusively and lets them go before they reach the age of 19. Two recent lay-offs has brought this practice to the attention of the staff who feel the practice is not ethical. The workers feel Josh is trying to use the system to avoid paying the workers a decent wage or to gain full time employment. If Josh does not settle this issue quickly, because the workers will go back to the Collective to ask for higher wages and a guarantee of work after they turn 19. Worse yet, if Jolly Jump’s US teens get wind of the hourly salary difference, they may very well come to expect a large raise.

Are Josh’s employment practices unethical?

Would his actions be considered unethical in the United States?

Discuss the ethics of doing business in another country and cultural relativism.

Explanation / Answer

Definitely this kind of practice is unethical as Josh is using the legal system as a tool to bypass minimum wage provision system which could be determined by the employees. In this kind of approach Josh is directly affecting the overall ethical standards of doing business as he is hiring in which year workers and letting them go as they learn the skill and reaches at a level of maturity and better skill where they can earn more from the same job they were doing.

Yes,actions would be considered unethical in United States under the fair labour standards act as minimum age requirement is 16 years to work during school hours and the limitations are also added for working after 14 years which is totally unethical in America. Type of approach would lead Josh into a trouble as it would be illegal to take work from underage employees.

Doing business in other country requires proper understanding of the culture and availability of the structure of employment in a specific country. If any of the specific act or law looks unfamiliar or unethical to any company then they should work against the same for mitigating the specification for creating a better unethical working environment. Child labour is one of the most important problems which have to be focused in each and every culture but doing business internationally requires a special attention to the child business as International subsidiaries can use children as a tool for paying less and getting more work done which could be very harmful for the society as well as for the brand image.

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