EU Sources - Arguments in favour of a minimum wage - March 31, 2016

The Foundation for European Progressive Studies (FEPS) published two policy briefs that deal with the impact of the application of a system of minimum wages. In the first paper, important advantages of a European minimum wage policy are listed, such as a minimum floor for wage earners and a minimum of wage protection for the low paid. The authors of the second brief find no evidence for the claim that minimum wage is a counter-productive measure as it increases labour costs, and therefore unemployment. In most cases, minimum wage has almost no effect on employment. In some cases, the effect on employment is even positive. Furthermore, a minimum wage tends to decrease wage dispersion and therefore is an efficient tool to tackle inequalities. As other labour market institutions, it can be argued that a minimum wage is part of a predistribution policy, aiming at tackling pre-tax inequalities. The case for a European-wide minimum wage is strong, according to the authors, as it minimises the adverse effects of social dumping induced by pro-competitiveness policies conducted simultaneously by most European countries.

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