The People behind the Minimum Wage Database

Are minimum wages keeping pace with inflation? Do some countries do better than others when it comes to updating minimum wages? And does publishing minimum wages make a difference to the lives of workers?

Since 2014, the WageIndicator Minimum Wage Database (MWD) has offered monthly minimum wage data in Local Currency Units (LCU) for 207 countries. This effectively makes the database one of the largest in the world; and taken the recent focus on minimum wages globally through initiatives such as the UN's SDG-8 and the ILO's Centenary Declaration, also makes it one of the most relevant databases in the world.

However, global knowledge about minimum wage levels and their adequacy remains limited. Research and advocacy remain essential - especially to measure the efficacy of minimum wages .

To this end, Kea Tijdens, Maarten van Klaveren, Nii Ashia Amanquarnor and Iftikhar Ahmad, who work on the WageIndicator Minimum Wage Database, presented their research paper Rationales of minimum wage setting and understanding the variety in minimum wage rates in 207 countries, 2014-2023 at the International Conference on Corporate Social Responsibility and Decent Work in the era of Sustainable Development Goals, in Pune, India during March 2024. You can access the full paper here.

We spoke with Kea Tijdens, Maarten van Klaveren and Nii Ashia about the paper, and based on their findings, opened with the crucial question: 

Are minimum wages actually getting lower?

Kea answers immediately and unhesitatingly: “Yes. Relative to inflation, and in certain countries.”

Nii expands: “The latest analysis show that only around nine countries have kept up (minimum wages) with inflation. Over time, the buying power of people earning a minimum wage is getting lower. In some cases, people cannot even buy what they were able to buy the previous year.”

So is there a difference between countries, and if so, why?

Kea explains:  “In general, African countries are doing worse than European countries, which tend to update their wages more frequently and have larger coverage. African countries do not update as much, and tend to have fragmented coverage.”

Fragmented coverage refers to wages that are just for certain groups, such as domestic workers, or for certain regions, or certain industries. Basically fragmentation is bad - it is better to have a set national minimum wage. However, this only happens in a few countries.

For example, in the over 200 countries covered by the WageIndicator Minimum Wage Database, 18 lack statutory minimum wages, 97 countries have a single minimum wage rate, while 59 have between two and 10 rates. Additionally, 21 countries have between 11 and 100 rates, nine have between 100 and 1,000 rates, and three have more than 1,000 rates.

Maarten says: “In some countries where there is a very complex (and fragmented) minimum wage system, this complexity can result in people not actually knowing what is the applicable minimum wage. Fragmentation is not good for workers.”

What about protection for vulnerable workers?

ILO Convention No. 26 stipulates implementation of minimum wages for low-paid workers not protected by collective bargaining. The WageIndicator Minimum Wage Database has identified the following rates:

Agricultural Workers: 1,594 rates in 30 countries.
Domestic Workers: 112 rates in 24 countries.
Unskilled and Semi-skilled Workers: 4,547 rates in 14 countries.
Piece Rate Workers: 1,053 rates in four countries.

What about compliance?

When it comes to compliance, Nii and Kea say they do not measure this, but anecdotal and other evidence indicates that some companies know they must comply with a minimum wage; but if there is a wage that is higher, they will ignore this. Furthermore, due to the complexity of minimum wages in some countries, both employers and employees can be ignorant of the current minimum wages for their sector.

And adding to this, is that in some countries such as the USA, the national minimum wage is very low - but many cities and counties have the power to make laws to raise the minimum wage in certain sectors.

Does more frequent updating of minimum wages help?

Kea says it is better than infrequent updating. “But it is not a stand-alone activity. It depends on inflation. Both Turkey and Argentina, as examples, have high inflation, and they update their minimum wages every half year. “

However, Nii says there is no actual pattern for updating. “And it is only in recent years that some countries are updating more frequently.” This, despite the fact that countries are required by ILO Convention No. 131 to adjust minimum wages according to their Consumer Price Index (CPI).

So the big question is - does publishing this data have an effect on improving minimum wages?

Kea feels that “setting minimum wages is a political process.”

Maarten says: “Over the past ten years there has been a growing consciousness around minimum wages, especially from the workers’ side. In addition, the ILO, wage boards, national parliaments and trade unions realise the need to keep up with inflation.  15 or 20 years ago, this was much less.”

Kea concedes that “the beauty of publishing minimum wages from around the world does mean that workers can negotiate better. And they can fight non-compliance. We are giving the tools to workers to query their salaries.”

Nii is more optimistic: “Publishing, putting the info out there, cannot force updates or an increase in rates. But it empowers everyone who is in a position to take advantage of that data – from compliance, to seeing what other countries are doing, across regions and sectors.”

Another question - should the living wage replace the minimum wage?

Kea reckons that “many countries want to keep minimum wages in line with prices. But they do not have enough data to keep up, they don’t know the prices and how much they have been raised. Countries should press to have better information regarding consumer prices and (bread) baskets. There’s also a lot of debate about what should be in these baskets. Important to remember is that minimum wages are embedded in the legal system of a country. That said, a minimum wage needs to be a living wage.”

So baskets need to be measured better, and consumption updated more frequently. Ultimately, a minimum wage should be a living wage.

On another tack - to what extent do Collective Bargaining Agreements (CBAs) have a role to play?

Kea says that CBAs can lift the lowest wages. “Actual pay can be much higher than a minimum wage due to CBAs. It’s very important to have a pay structure within companies and industries – they make a big difference from the inside.  If there is a structure, which can be negotiated collectively via CBAs, you don’t get as much inequality within a company. Otherwise the people with the loudest voice get the most pay, generating inequality and envy.”

Minimum wages generate challenges - from compliance to matching consumer spending. And compiling one of the world’s biggest databases on minimum wages is equally challenging. Is it all worth it? Are minimum wages still important?

Nii has the last word: “When you see how scattered minimum wages are, how difficult it is to gather them, and to understand the complexity of it all, it may seem daunting. But this database is very important. I am discovering things still. And the more I realise I do not know, the more I realise we need to put out that information.”

 April, 2024