Fixing minimum wage levels in developing countries: Common failures and remedies |
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| Authors: | Catherine SAGET |
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| Institution: | ILO, Geneva. I am very grateful to Duncan Campbell, Philippe Egger, Rolph van der Hoeven, David Kucera, Sangheon Lee, Malte Luebker, Andrés Marinakis, Marleen Rueda, Bill Salter and Paul Swaim for their valuable comments and suggestions. I would also like to thank Fran?ois Eyraud for his help and encouragement. This article is a revised version of a working paper drafted for the ILO's Jakarta Office. |
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| Abstract: | Some developing countries have set their minimum wages too high or too low to constitute a meaningful constraint on employers. The article compares minimum wages worldwide, proposes several ways of measuring them in developing countries and discusses whether they are effective thresholds in those countries. The second part of the article considers the institutional factors leading countries to set minimum wages at extreme levels. The author concludes that the minimum wage is used as a policy instrument to several ends – wage negotiation, deflation and social dialogue – which results in the absence of a wage floor, weak collective bargaining, or non‐compliance. |
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| Keywords: | minimum wage wage determination developing countries |
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