Minimum Wage around the World
Minimum wage refers to the lowest legally permissible pay that workers can receive, established through government policies or union negotiations. The concept emerged in the late 19th century, primarily driven by labor movements advocating for fair compensation to prevent exploitation and poverty. While many developed nations have adopted minimum wage laws, the specifics of these regulations can vary significantly across countries. For instance, the United States has a federal minimum wage, but states can set their own rates, often higher than the federal level. In contrast, countries like Denmark and Sweden rely on strong labor unions to negotiate wages without government-mandated minimums.
Globally, minimum wage rates are influenced by multiple factors, including economic conditions and regional disparities. Some regions, particularly in developing countries, may lack minimum wage laws due to political instability. Ongoing debates surround the effectiveness of minimum wage policies, with proponents arguing for increases to keep pace with inflation, while opponents express concerns about potential negative impacts on employment and business costs. Several nations have established their minimum wage frameworks, with notable examples including Australia, Canada, and the United Kingdom, each with unique methods of calculation and implementation.
Minimum Wage around the World
Minimum wage is the lowest rate of pay at which a worker may be legally employed. Minimum wages are set by either the government or union negotiations and can be calculated hourly, weekly, or monthly. The first national minimum-wage laws were instituted in the late nineteenth century, and most developed countries eventually adopted some form of minimum wage. Such laws have proven controversial, however, with supporters claiming that they protect workers from exploitation and opponents arguing that they negatively impact hiring and economic output. Minimum-wage policies continue to vary considerably worldwide.
Brief History
Several municipalities in sixteenth-century England were the first to implement some government regulation of wages. However, the modern concept of a minimum wage grew from the labor movements of the nineteenth and early twentieth centuries. Workers around the world were often forced to work long hours for low wages to provide for their families. Reformers saw a government-mandated "living wage" as fixing an injustice and providing workers with enough money to raise them out of poverty.
The first national minimum wage policy was instituted in New Zealand in 1894. The law established an arbitration board to set the country's minimum pay and applied to all businesses and industries. Australia began passing its own minimum-wage laws around the turn of the twentieth century. These at first affected only certain businesses, but they were expanded in 1907 to ensure a "basic wage" for all workers. The United Kingdom (UK) set up its own wage-arbitration boards in 1909.
In the United States, Massachusetts was the first state to pass a minimum-wage law in 1912, but that legislation applied only to women and children. American support for a federal minimum wage increased during the Great Depression. After an initial attempt to institute such a policy in 1933 failed, the US enacted the Fair Labor Standards Act of 1938. The law established overtime pay, put age limits on child workers, and set the nation's minimum wage at twenty-five cents per hour. Congressional action was needed to raise the federal minimum wage, which was done several times over the following decades.
By the early twenty-first century, minimum wage policies were commonplace in developed nations. While many national governments set minimum wage requirements, other jurisdictions sometimes also instituted their own measures. For example, many US states adopted minimum wages higher than the federal standard. Different jurisdictions also often used different methods for implementing minimum wage policies, including how to calculate the wage.
Even with minimum wages well established in many places, debate over the issue has continued. Proponents often call for substantial minimum wage increases to keep pace with rising prices and other economic challenges. While some jurisdictions have used formulas or other methods to tie minimum wage levels to various economic metrics, others (like the United States) have maintained fixed wages that can be adjusted only by legislative action. Meanwhile, opponents claim that imposing or raising minimum wage would cut into companies' profits and force them to raise prices, reduce staffing, and hire fewer workers. Some economists contend that higher mandatory minimum pay would encourage employers to hire more experienced workers, leaving many unskilled or entry-level workers unable to find jobs. Both sides have cited real-world examples, economic theory, and an array of research to support their arguments.
Wages in Selected Nations
Most developed countries have minimum-wage regulations. Many of the nations that have no such laws are developing countries with politically unstable governments. A few developed nations, such as Denmark, Sweden, Switzerland, and Finland, do not have government-mandated minimum wages, but these countries tend to have strong labor unions that have negotiated a wage structure with employers, effectively ensuring a minimum wage. The following list provides an overview of minimum wages from selected nations around the globe.
- United States: The federal minimum wage was increased to $7.25 per hour in 2009, and remained at that level into the 2020s. Each US state and municipality can set its own wage rules. According to the US Department of Labor, by 2024, thirty states had higher minimum wages than the federal standard. Washington state had the highest minimum wage, at $16.28 per hour. Two states, Georgia and Wyoming, technically had minimum wages lower than the federal minimum.
- United Kingdom: The UK set up wage-arbitration boards in 1909 but did not have a government-mandated minimum wage until 1999. That rate applied only to workers over the age of twenty-two and was set at £3.60 per hour. In 2016 the UK adopted new regulations for a National Living Wage, initially set at £7.20 for those aged twenty-five or older (younger workers could be paid at lesser rates based on their age range). The age threshold was reduced to twenty-three in 2021 and to twenty-one in 2024, by which time the minimum wage stood at £11.44. An independent government agency known as the Low Pay Commission calculates wage level recommendations.
- Canada: Federally regulated businesses in Canada are subject to a federal minimum wage, which is tied to the national Consumer Price Index. In 2024 the rate increased to C$17.30 per hour. Minimum wage laws for other workers vary by province and territory. By 2024, the territory of Nunavut had the highest rate, at C$19, and the province of Saskatchewan had the lowest, at C$15.00. Some provinces also have different rates for different professions.
- Australia: The Australian government passed the Fair Work Act 2009, empowering a Fair Work Commission (FWC) to calculate and set a national minimum wage each year. This led the country to adopt one of the highest minimum wages in the developed world. In 2024, the national minimum wage stood at A$24.10 per hour or A$915.90 per week. Australia also adopted some special minimum wage rates based on age group and certain occupations.
- China: China passed its first wage laws in 2004 and adopted a monthly minimum salary for full-time workers and an hourly figure for part-time workers. Rates vary widely by region and occupation. By the early 2020s, the highest rates were in Shanghai and the lowest in parts of Fujian Province.
- France: France instituted a minimum wage in 1950 and generally increases it each year based on the rate of inflation. In 2024, the nation's hourly rate increased to €11.65.
- Germany: Germany passed its first minimum-wage laws in 2015. The standard hourly rate was €12.41 in 2024, but occupations such as construction worker or teacher are paid significantly higher based on skill level and place of employment.
- Mexico: Mexico long had the lowest minimum wage among the nations represented by the Organisation for Economic Co-Operation and Development (OECD). In 2024, Mexico's daily rate for general workers was 248.93 pesos (US$6.12). However, that year the Mexican government approved a constitutional measure to raise the minimum wage to approximately 279 pesos (US$13.75) and ensure annual increases would account for inflation.
- Russia: The Russian government sets the national minimum wage based on median salaries from the previous year. In 2024, Russia had a monthly minimum wage of 19,242.00 rubles (approximately US$210). Different regions of the country can also set higher minimum wages at their discretion.
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