Minimum wage law

Minimum wage law

Minimum wage law is the body of law which prohibits employers from hiring employees or workers for less than a given hourly, daily or monthly minimum wage. More than 90% of all countries have some kind of minimum wage legislation.[1]

Until recently, minimum wage laws were usually very tightly focused. In the U.S. and Great Britain, for example, they applied only to women and children. Only after the Great Depression did many industrialized economies extend them to the general work force. Even then, the laws were often specific to certain industries. In France, for example, they were extensions of existing trade union legislation. In the U.S., industry specific wage restrictions were held to be unconstitutional. The country's Fair Labor Standards Act of 1938 established a uniform national minimum wage for nonfarm, nonsupervisory workers. Coverage was later extended to most of the labor force.[2]

The first moves to legislate wages did not set minimum wages, rather the laws created arbitration boards and councils to resolve labour conflicts before the recourse to strikes.[citation needed]

  • In 1896, New Zealand established such arbitration boards with the Industrial Conciliation and Arbitration Act
  • In 1899, the colony of Victoria, Australia established similar boards
  • In 1907, the Harvester decision was handed down in Australia. It established a 'living wage' for a man, his wife and two children to "live in frugal comfort"
  • In 1909, the Trade Boards Act was enacted in the United Kingdom, establishing four such boards
  • In 1912, the state of Massachusetts, United States, set minimum wages for women and children
  • In the United States, statutory minimum wages were first introduced nationally in 1938[3]
  • In the 1960s, minimum wage laws were introduced into Latin America as part of the Alliance for Progress; however these minimum wages were, and are, low[4]


Minimum wage law by country


  • In 1896 in Victoria, Australia, an amendment to the Factories Act provided for the creation of a wages board.[5] The wages board did not set a universal minimum wage; rather it set basic wages for 6 industries that were considered to pay low wages.[6] First enacted as a four year experiment, the wages board was renewed in 1900 and made permanent in 1904; by that time it covered 150 different industries.[6] By 1902, other Australian states, such as New South Wales and Western Australia, had also formed wages boards.[5]
  • The notion of a "basic wage" was established in 1907 with the Harvester Judgment.
  • A 2005 study found that the Australian federal minimum wage was 58% of the median wage, compared to 45% in the UK and 34% in the U.S.[7] The typical minimum wage worker is in a middle-income household.[7]
  • In Australia, on 14 December 2005, the Australian Fair Pay Commission was established under the Workplace Relations Amendment (WorkChoices) Act 2005. It is the responsibility of the commission to adjust the standard federal minimum wage,[8] replacing the role of the Australian Industrial Relations Commission that took submissions from a variety of sources to determine appropriate minimum wages. The Australian Fair Pay Commission was replaced by Fair Work Australia in 2010.[9]
  • From 1 October 2007, the Australia standard Federal Minimum Wage is $13.74 per hour or $522.12 per week.[10]
  • From 1 October 2008, the Australia standard Federal Minimum Wage is $14.31 per hour or $543.78 per week.[11]
  • In 2009, the Federal Minimum Wage was not changed.[12]
  • In 2010, the Federal Minimum Wage was raised to $15 per hour or $569.90 per week[13]
  • As of July 1, 2011, The Federal minimum wage is $15.51 per hour or $589.30 per week (38 hours)[14]


The Brazilian national minimum wage is adjusted annually. The minimum wage in 2009 was R$ 465 per month (which corresponds to R$ 15.55 per day and R$ 2.11 per hour).[15]

2010= Brazilian minimum wage increased to R$ 545 per month (which corresponds to R$18.7 per day and R$2.48 per hour).[16]

Brazilian states can set higher minimum wages, which may vary in different economic sectors.

In Brazil each increase the minimum wage results in a significant burden on the federal budget, because the minimum wage is tied to social security benefits and other government programs and salaries.[17]


Under the Canadian Constitution's federal-provincial division of powers, the responsibility for enacting and enforcing labour laws rests with the ten provinces; the three territories also were granted this power by virtue of federal legislation. This means that each province and territory has its own minimum wage. The lowest general minimum wage in force as of Nov 1, 2011 is that of British Columbia (C$9.50 an hour), the highest is that of Ontario (C$10.25 an hour). Some provinces allow lower wages to be paid to liquor servers and other tip earners, and/or to inexperienced employees.

The federal government could theoretically set its own minimum wage rates for workers in federal jurisdiction industries (interprovincial railways, for example). As of 2006 however, the federal minimum wage is defined to be the general adult minimum wage rate of the province or territory where the work is performed. This means, for example, that an interprovincial railway company could not legally pay a worker in British Columbia less than C$9.5 an hour regardless of the worker's experience.

People's Republic of China

The Ministry of Human Resources and Social Security set the People's Republic of China's first minimum wage law on 1 March 2004. The Regulations on Enterprises Minimum Wage was made to "ensure the basic needs of the worker and his family, to help improve workers' performance and to promote fair competition between enterprises." One monthly minimum wage was set for full-time workers, and one hourly minimum wage for part-time workers. Provinces, municipalities, and [[Autonomous areas of China|autonomouf the latest minimum monthly wages for various provinces or municipalities in China.

European Union

In the European Union 18 out of 27 member states currently have national minimum wages.[18] Many countries, such as Sweden, Finland, Denmark, Switzerland, Germany, Austria, Italy, and Cyprus have no minimum wage laws but rely on employer groups and trade unions to set minimum earnings through collective bargaining.[19]


France's national minimum wage (SMIC - salaire minimum de croissance) as of 1 January 2010 is 8.86 per hour, representing an increase of 0.5% over the previous rate.[20] A previous increase of 1.3% as from 1 July 2009, brought the hourly rate to 8.82, up from July 2008, when it was set at 8.71 per hour.[21] In July 2006, the minimum wage in France was set at 8.27 (~US$11.98) per hour. In 2004, 15% of the working population received the minimum wage. The minimum wage in France is updated every year in January by the government. By law, the increase cannot be lower than the inflation for the current year. In the recent years the increase was up to two times higher than the inflation (around 5% raise with an inflation around 2%).

Hong Kong

The Legislative Council of Hong Kong (LegCo) passed a Minimum Wage Bill in 2010, requiring the Chief Executive to propose a minimum wage. Through a Provisional Minimum Wage Commission appointed by the government, a HK$28 hourly wage floor was introduced and eventually accepted by LegCo after much debate. Prior to this, a monthly minimum wage already existed for foreign domestic helpers, HK$3,580/month.[22][23] In some trades, such as bar-bending and bamboo scaffolding workers in the construction industry, have daily minimum wage negotiated between the trade unions and employers' organisations.


The minimum wage was introduced in the Republic of Ireland in 2000 at IR£4.40 (5.59) per hour,[24] and as of early 2011, it is €7.65 per hour. This is subject to reduction as follows:

  • 30% reduction for all employees under 18.
  • 20% reduction for employees over 18 in their first year of employment in any job since they turned 18.
  • 10% reduction for employees over 18 in their second year of employment in any job since they turned 18.

It may further be reduced by up to €7.73 a day if lodgings and/or food are provided as part of a job.[25]

Trainees (including those over 18) are also entitled to different minimum wages, reduced as follows:

  • 25% reduction for the time during the first one-third of the course.
  • 20% reduction for the time during the second one-third of the course.
  • 10% reduction for the time during the final one-third of the course.

Ireland has the second highest minimum wage in the EU, after Luxembourg.[26]

However, Ireland's minimum wage prior to the €1 cut in the 2011 budget, was only fifth highest of eight EU countries surveyed for the British Low-Pay Commission Report in 2010, with the UK, Netherlands, France and Belgium all listed as having higher minimum wage rates when OECD Comparative Price Levels are taken into account.[27]


In Japan, minimum wage depends on the industry and the region. Industrial minimum wages apply for certain industries and usually set higher than the regional minimum.[28] If regional and industrial minimum wages differ, higher of two will apply.[29]

As of 2011, regional minimum wages range from ¥645 (~US$8.40, 6.10) to ¥837 (~US$10.90, €7.95) per hour for all workers.[28][30]

Cost of commuting, extra pays (such as working on holidays, at night, overtime, etc.) and temporary pays (bonus, tips, etc.) must be paid exclusively and cannot be used to calculate towards minimum wage. Regional minimum hourly wages are set by the Minister of Labour or the Chief of the Prefectural Labour Standards Office. Recommendations are made by the Minimum Wage Council.[31]

New Zealand

  • New Zealand was the first country to implement a national minimum wage, enacted by its government through the Industrial Conciliation and Arbitration Act 1894.[5]
  • From 1 April 2010, the minimum wage for employees aged 16 years and over is $12.75 an hour before tax. That’s $102 for an eight hour day, or $510 for a 40 hour week.[32]
  • From 1 April 2008, the minimum wage for employees rose to $11.25 per hour before tax. Also the youth minimum wage, for 16 and 17 year old employees was abolished (previously $9.00)
  • From 1 April 2010, the training wage rose to $10.20 per hour before tax. That’s $81.60 for an eight hour day, and $408 for a 40 hour week.
  • From 1 April 2011, the training wage rose to $10.40 per hour before tax. The minimum wage was increased to $13.00 an hour.

This is the info on the NZ wage now:

  • For employees under 16 years old, there is no minimum wage.
  • For employees between 16 and 17 years old or for employees in training, the minimum wage is $10.20 per hour.
  • The training wage applies to people doing recognised industry training involving at least 60 credits a year.
  • For employees 18 and older, the minimum wage is $13.00 per hour before tax.


Monthly minimum wages in Pakistan are recommended by the Federal Government under nationally-applicable Labour Policies and set by Provincial Minimum Wages Boards under the Minimum Wages Ordinance, 1961.

Pakistan's first minimum wage was introduced in 1992 when it was set at PKR 1,500 (~US$ 24.60) per month.

It was, subsequently, raised:

in 1996 to PKR 1,650 (~US$ 27.10) per month
in 1998 to PKR 1,950 (~US$ 32) per month[33]
in 2006 to PKR 4,000 (~US$ $66) per month
in 2007 to PKR 4,600 per month
in 2008 to PKR 6,000 per month
in 2010 to PKR 7,000 (~US$ $82.4) per month[34]


Two minimum wage levels are enforced in Romania. For state employees, the level is set by law at 600 RON (~US$ 200). For all other employees, the wage is set at 440RON (~US$ 145) by collective bargaining, which also stipulates multiplication indices for various levels of education. Jobs that require high-school and college qualifications are paid at least 1.5 and 2 times the minimum wage, respectively.[35] Teachers' unions resorted to justice to claim same treatment and be paid according to collective bargaining. As of November 2007, they won three landmark cases and expect similar decisions in several dozens other courts.[36] A single, unified level was proposed starting 1 January 2008 but it failed.[37]

Republic of China (Taiwan)

The Republic of China (Taiwan) government does not have a set minimum wage, but a basic wage in its Labor Standards Law serves the minimum wage function. The basic wage set per month is NT$17,880, effective January 1, 2011.[38]

United Kingdom

Municipal regulation of wage levels began in some towns in 1524.

Wages Councils

The Trade Boards Act of 1909 created four Trades Boards that set minimum wages which varied between industries for a number of sectors where "sweating" was generally regarded as a problem and where collective bargaining was not well established. This system was extended considerably after the Second World War; in 1945 Trades Boards became Wages Councils, which set minimum wage standards in many sectors of the economy, including the service sector as well as manufacturing.[39][40] Wages Councils were finally abolished in 1993,[41] having fallen into decline due, in large part, to Trades Union opposition. A lower limit of pay, or "pay floor" was regarded as threatening the voluntary system of collective bargaining favoured in the UK. The government had first made a serious attempt to abolish Wages Councils in 1986, having abandoned existing legislation that tried to widen the scope of voluntary agreements to include those firms that had not taken part in negotiations, such as the Fair Wages Resolutions. These required that government contractors pay fair wages and respect the rights of their employees to be members of trades unions.

Instead the Wages Act 1986 reformed the wages councils and abolished the power to create new ones.

National Minimum Wage

A National Minimum Wage (NMW) was introduced for the first time by the Labour government on 1 April 1999 at the rate of £3.60 per hour for those workers aged 22 and over[42],Labour having promised to set a minimum wage in their 1997 general election campaign. In its election manifesto, it had claimed that every other modern industrial country had already adopted a minimum wage.[43]

This rate was set after the Low Pay Commission (LPC), an independent body the government appointed in July 1997 to advise it on low pay, recommended the rate.[44] The LPC's permanent status was later confirmed and it continues to make recommendations to government on the NMW, which has been uprated in October every year since 2000. The LPC board consists of nine members—three trade unionists, three employers, and three labour market relations experts. The Commission undertakes consultations each year to gather available evidence before making recommendations in its biennial review—the next such set of recommendations being due in the spring of 2007.

The current minimum wage in the UK, set in October 2010 by the new Conservative-Liberal Democrat coalition government, for adults aged 21 or older is £5.93 per hour. For workers between the ages of 18 and 20 the minimum wage is £4.92 per hour. The minimum hourly wage for all workers under the age of 18 (and who are, in addition, no longer of compulsory school age) is £3.64. There is no minimum wage for those still of compulsory school age. With effect from October 2011, the minimum wage will increase to £6.08 per hour for workers aged 21 and above, £4.98 for workers aged 18-20, £3.68 for workers aged 16-17, and £2.60 for apprentices regardless of age.[45]

Some workers undertaking apprenticeships or accredited training may be exempted (that is, not considered eligible to receive the NMW) for a certain period of time, which varies according to their age and the length of time in employment. Other categories of worker who are exempt include au pairs, share fishermen, clergy, those in the Armed Forces, prisoners and some people working in family businesses. The rate payable under the NMW can, in all cases, also be reduced where accommodation is provided to the worker.

Unlike most other employment rights legislation in the UK, which generally rely on affected individuals raising grievances and making claims, if necessary, before tribunals to enforce these rights, the NMW has compliance teams, attached to Her Majesty's Revenue and Customs (HMRC) offices who will act on approaches from workers who think they are being paid less than the minimum wage by contacting and visiting their employers. Affected workers can either make a complaint directly to a national helpline or seek advice from another agencies such as their local Citizens Advice Bureau or the Scottish Low Pay Unit—this is particularly recommended if other employment rights issues are involved, as the HMRC can only deal with minimum wage enquiries.

United States

History of the federal minimum wage in real and nominal dollars in the United States.

In the United States, statutory minimum wages were first introduced nationally in 1938.[3]

The Fair Minimum Wage Act of 2007 is the current federal minimum wage law of the United States. It was signed into law on April 25, 2009 as a rider to the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007. The act implemented three increases to the federal minimum wage—from $5.15 an hour to $5.85 per hour on July 24, 2007, to $6.55 per hour on July 24, 2008, and finally to $7.25 an hour on July 24, 2009.[46] The bill also contains almost $5 billion in tax cuts for small businesses.

Nearly all states within the United States have minimum wage laws; Alabama, Louisiana, Mississippi, South Carolina, and Tennessee are the only states yet to set a minimum wage law.[47]

As of July 24, 2009, U.S. federal law requires a minimum wage of at least $7.25 per hour.[48] Washington has the highest minimum wage in the U.S. of $9.04 per hour (as of January 1, 2012). Oregon has the second highest minimum wage rate of $8.40 per hour.[49] The next highest state wage rates are in Connecticut, Illinois, Nevada, and the District of Columbia at $8.25 per hour, and then Vermont at $8.06 per hour.[50]

Around June 9th, 2011, the New Hampshire State Legislater repealed the state's minimum wage law that was already on par with the federal minimum wage law. The repeal was vetoed by Gov. Lynch and then overridden by Speaker William O'Brian in a surprise vote on the house floor and by the State Senate.

International Labour Organization

International Labour Organization insists "minimum wage fixing" for rights of labours and has adopted Minimum Wage-Fixing Machinery Convention, 1928, Minimum Wage Fixing Machinery (Agriculture) Convention, 1951 and Minimum Wage Fixing Convention, 1970 following up these former Conventions.

See also


  1. ^ ILO 2006: Minimum wages policy (PDF)
  2. ^ Eatwell, John, Ed.; Murray Milgate, Peter Newman (1987). The New Palgrave: A Dictionary of Economics. London: The Macmillan Press Limited. pp. 476–478. ISBN 0-333-37235-2. 
  3. ^ a b Sanjiv Sachdev (2003). Raising the rate: An evaluation of the uprating mechanism for the minimum wage. Employee Relations. 
  4. ^ Bethell, Leslie (June 29, 1990). The Cambridge History of Latin America. Cambridge University Press. ISBN 0-521-24518-4.  p. 342.
  5. ^ a b c American Academy of Political and Social Science. "The Cost of Living." Philadelphia, 1913.
  6. ^ a b Waltman, Jerold. "The Politics of the Minimum Wage." University of Illinois Press. 2000
  7. ^ a b Leigh, Andrew (2005). Does raising the minimum wage help the poor?. Discussion Paper No. 501. Australian National University Centre for Economic Policy Research. Retrieved 2006-05-11. 
  8. ^ " - About the Commission". Australian Fair Pay Commission. Retrieved 2007-07-05. 
  9. ^ "Australian Labor Party : Federal Labor's New Independent Industrial Umpire: Fair Work Australia". Australian Labor Party. Retrieved 2008-07-12. [dead link]
  10. ^ "Executive Summary, July 2007". Australian Fair Pay Commission. Retrieved 2008-07-27. 
  11. ^ "Executive Summary, July 2008". Australian Fair Pay Commission. Retrieved 2008-07-27. 
  12. ^
  13. ^ ABC News |
  14. ^ Australian Fair Work Ombudsman|
  15. ^ [1]
  16. ^ [2]
  17. ^ Lula bolsters Brazil minimum wage. -- BBC News.
  18. ^ Eurostat (2006): Minimum Wages 2006 - Variations from 82 to 1503 euro gross per month(PDF)
  19. ^ Ehrenberg, Ronald G. Labor Markets and Integrating National Economies, Brookings Institution Press (1994), p. 41
  20. ^,89/fiches-pratiques,91/remuneration,113/le-smic,1027.html
  21. ^ "Table of past minimum wages in France (website in French)". Retrieved 2010-09-30. 
  22. ^ Immigration Department
  23. ^ Hong Kong Government
  24. ^ "Minimum wage comes into effect today". RTÉ. 1 April 2000. Retrieved 27 September 2010. 
  25. ^ "Minimum rates of pay". Citizens Information. Retrieved 10 May 2011. 
  26. ^ RTÉ News - Minimum wage rises by 35c per hour
  27. ^
  28. ^ a b 厚生労働省:地域別・特定(産業別)最低賃金の全国一覧
  29. ^ 2008 Country Reports on Human Rights Practices, United States Department of State.
  30. ^ Approximate JPY-USD/EUR conversions as of 17 October 2011 UTC
  31. ^ "Realization of Meaningful, Secure Employment for Workers". Ministry of Health, Labour and Welfare of Japan. Retrieved 2006-12-19. 
  32. ^ Minimum Pay : Employment Relations Service
  33. ^ Bureau of International Labor Affairs (1998). "Pakistan Minimum Wage". U.S. Department of Labor. Retrieved 2006-12-19. [dead link]
  34. ^
  35. ^ "Cele doua salarii minime in vigoare bulverseaza autoritatile si angajatorii". Ziarul Financiar. 2007-01-17. Archived from the original on 2007-07-14. Retrieved 2007-11-18. 
  36. ^ "Salariile intelectualilor ar putea fi sacrificate pentru ale muncitorilor". Cotidianul. -01-07. Retrieved 2007-11-18. 
  37. ^ "Salariul minim: 500 de lei pentru muncitori. Diploma se mai negociaza". Cotidianul. 2007-11-14. Retrieved 2007-11-18. 
  38. ^ [3]
  39. ^ wages-council Wages Council The Oxford Dictionary of Economics. Ed. John Black. Oxford University Press, 2002. 2006. Retrieved on 6 Sep, 2008
  40. ^ "Wages Act 1986 (c. 48)". UK Statute Law Database. UK Ministry of Justice. 
  41. ^ "Definitions and interpretation / wages order formerly WAGES ACT 1986 s.14 now REPEALED". Disclaw. Retrieved 2008-09-06. 
  42. ^ "History of the National Minimum Wage". Employment Matters. United Kingdom Department of Trade and Industry. 17 June 2006. Retrieved 2006-06-22. 
  43. ^ [4]
  44. ^ What We Do Low Pay Commission
  45. ^ [5]
  46. ^ "Bill Summary and Status H.R. 2". The Library of Congress. Retrieved August 10, 2010. 
  47. ^ DOL WHD: Minimum Wage Laws in the States
  48. ^
  49. ^ "Oregon Minimum Wage to Rise to $8.40 on Jan. 1". The Oregonian. September 16, 2008. 
  50. ^, consulted 17 April 2010.

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