How is minimum wage established?



 

This map tells us how countries establish a minimum rate of pay for workers.

More on this variable:

  • Not established by law or collective bargaining includes cases where there is no minimum wage legislation as well as where legislation provides a framework for establishing the minimum wage, but the country has not yet implemented one.
  • Set by collective bargaining usually means that groups representing entire sectors or professions negotiate with employers to establish a minimum wage that applies to most or all workers. Even if employers in a particular sector do not hold membership in the organization that sets the minimum wage for that sector, they must honor the minimum wage set by collective agreement for a particular sector or profession
    1. Nonunionized workers may or may not be covered.
    2. The state may or may not have the right to set a separate minimum for unprotected workers.
  • Set by law means that legislation establishes the minimum wage for the country
    1. The minimum wage may still vary by occupation, sector, or region.
    2. Some countries set different minimum wages for particular categories of workers, such as youth, piece-rate workers, or new hires.
    3. Countries differ in terms of who is covered by the minimum wage. In many cases, certain types of employees have separate regulations (such as public-sector workers or civil servants), and in others particular groups of workers are excluded from minimum-wage protections, such as casual workers or small businesses.