The Minimum Wage Around the World

The minimum wage is used in well over half of the 194 nations of the world. As a look at Google’s news headlines for the minimum wage shows (accessible on the home page for this site), changes in the minimum wage somewhere in the world make the news nearly every day. Since its beginnings in New Zealand and Australia as a measure to protect vulnerable, low-paid workers in a few industries, the minimum wage has grown in both its global spread and its labor market impact, especially since the 1950s.

As Americans view the minimum wage around the world, one of its recognizable features is that in some countries it is set by national authorities and in others by more local governing bodies. Yet the familiarity is somewhat deceptive: while

U. S.

minimum wages can be set by both the states and the federal government, in other countries they are set at one level or the other but not both to the extent they can be here. Vietnam and South Korea are among the nations with a minimum wage for the entire country. Japan and

China

, in contrast, have regional minimums established by regional administrations.

Other minimum wage arrangements in other countries would strike Americans as less familiar:

The minimum wage in many and perhaps most countries is a monthly amount, not an hourly one.
For many nations, a major concern about the minimum wage is its impact not only on the workers who are paid regular wages in the formal economy but also on the large "informal" workforce as well, those who earn money more casually.
In the U. S., unions are known to support minimum wages but are not actual participants in the legislative process that sets them. In many other countries, unions take an active role in the administration of the minimum wage. Minimum wages are settled through discussions or negotiations among representative of the government, the unions, and employers. In some nations, the minimum wage is established not by the law at all but solely through labor agreements.
As in America, the debate in other countries over the minimum wage concerns its impact on employment. But the studies and reports about the minimum wage in other areas of the world also cover two less familiar controversies. One, especially in developing nations, is the impact of the minimum wage on the nation’s competitiveness in the global market for investments and economic participation generally. The other issue is the effect of minimum wage changes on the setting of wages above it. In many nations, as a result of union involvement in setting the minimum wage, the minimum wage sometimes loses its role as a wage floor and can become a higher, and rigid, basic union wage for many workers.

To Americans dulled by the repetition of a narrow range of arguments about the minimum wage at home, reading about the minimum wage in other countries can be refreshing. The permutations of the minimum wage and indeed the very controversy about it in other parts of the world remind us what a valuable, flexible, and widely used tool it has become in the pursuit of social justice and economic well-being.

--Brock Haussamen; revised August 2007