Legal minimum wage helps the working poor to keep up - October 2010

A comparison of Wage Indicator data between four countries, i.e. Argentina, Brazil, the Netherlands and Germany, reveals the importance of statutory or legal minimum wages for the working poor. Of these four countries Germany is the only one still lacking a national minimum wage. The effect of this omission is reflected in the figures of average earnings. In Germany, the most powerful economy of Europe, the spread of wages between well-paid and low-paid sectors is the highest of the four countries compared. The median hourly wage in German hotels and catering (sectors paying worst in all four countries) compared to the median in the best paying sector is 91 percent lower. In the Netherlands the pay gap between the lowest and highest is 59 per cent, whereas Argentina (74 per cent) and Brazil (78 per cent) hold a position in between.

Apparently the national minimum wage regulations in force in Argentina, Brazil and the Netherlands help to keep the gap between low- and high pay sectors smaller than in Germany where there is no legal minimum wage, despite substantial trade union pressure over the years. Moreover, the share of workers no longer covered by collective agreements is decreasing rather quickly in Germany, in particular in the retail trade, hotels and catering, were most working poor are found. 

Download the report Sectoral wage differentials: Four countries compared. (pdf, 132 kB)

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