Institutional Arrangements for Minimum Wage Setting in 195 Countries

Abstract

ILO Conventions C026 and C131 challenge countries to implement minimum wage-fixing mechanisms. How many countries do have a statutory minimum wage ((S)MW)? How many apply differentiated MWs? How many set MW by Collective Bargaining (CB)? And how many do not have either of these? This paper adresses these four questions. On this behalf we merged 12 databases with information about MW fixing mechanisms and their coverage (Eurofound, ICTWSS, five ILO databases, MACHequity, three WageIndicator databases, WorldBank). They vary regarding years and countries covered and characteristics coded. Europea and Latin America were best represented, co Oceania least. The merged database includes information about 195 countries for five years (2011 – 2015). Clearly, the absence of a single institution responsible for collecting MW policies and rates impedes producing adequate wordwide overviews. Against this backdrop we present and discuss outcomes of our inventory. Based on the harmonised database (97 countries with data covering all five years) we found that between 2011 and 2015 the percentage of countries with a SMW policy increased from 92% to 94%. According to the merged database (all 195 countries) between 75% and 93% of these countries applied a MW-fixing mechanism in at least one year. If a differentiated MW is defined as covering part of the dependent labour force only data is available for OECD countries and some others, indicating that 15% of the 48 countries at stake applied a partial minimum wage. If a differentiated MW is defined as covering the entire dependent labour force though with varying rates, a database of 76 countries with a SMW allowed to conclude that 53% applied differentiated MWs. Most breakdowns were by industry, followed by geographical areas and occupation. We found that countries with multiple MWs tend to mimic CB outcomes. Using the merged database we found that less than 3% of developing countries applied MW fixing through CB. Across Europe this share was considerably higher but decreasing. We detailed the underlying changes. Finally, we studied which countries recently did not have a MW; this was the case (over at least three years) for 16 countries.