Jobs and the Future of Work

Where are the world’s highest minimum wages?

Workers on the assembly line replace the back covers of 32-inch television sets at Element Electronics in Winnsboro, South Carolina May 29, 2014. When Walmart pledged last year to buy an extra $250 billion in U.S.-made goods over the next decade, it appeared to be just what was needed to help move America's putative manufacturing renaissance from rhetoric to reality. The company says consumers can now buy everything from U.S.-made flat-screen TVs, light bulbs and towels and curtains in its stores and on its website. The flat-screen TVs, made in Winnsboro, South Carolina by Element Electronics, may be the campaign?s biggest surprise to date. Today, Element?s 315,000-square-foot plant in South Carolina has six assembly lines making 32- and 40-inch TVs that are now available in all of Walmart's more than 4,000 U.S. Stores. The switch has led to significant savings in ocean freight charges and customs duties on finished goods - though like so many companies involved in the initiative Element has had difficulty finding domestic suppliers. To match Feature WALMART-RESHORING/     Picture taken May 29, 2014. REUTERS/Chris Keane

Workers on an assembly line in Winnsboro, South Carolina Image: REUTERS/Chris Keane

Joe Myers
Writer, Forum Agenda
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The US state of New York has passed legislation that will gradually raise the minimum wage to $15, bringing it level with the rate in California.

Rising global inequality has made minimum wages a hot topic in countries around the world, as governments attempt to ensure low-paid workers have the chance to escape relative poverty. For example, the UK has also recently introduced a National Living Wage of £7.20 ($10.25) for workers aged over 25.

So what does the highest minimum wage look like around the world?

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On top Down Under

The following chart shows the situation in 27 countries across the globe (based on data from 2013). The figures have been adjusted to their post-tax rate and for purchasing power parity, in US dollars.

    highest-minimum-wage-country-graph
Image: OECD

Australia has the highest minimum wage, with workers earning a minimum of US$9.54 an hour. Next is Luxembourg, where workers can expect to take home at least $9.24 after tax. The top three is completed by Belgium. Here, the post-tax minimum wage sits just above $8.50.

Several other European nations feature high up the list, with Ireland, France and the Netherlands following Belgium. There are also places in the top half for New Zealand, Canada and the United States, among others.

The minimum wage and inclusive growth

Last year’s ‘Inclusive Growth and Development Report’ from the World Economic Forum highlights the link between minimum wage policies and inclusive growth.

The report argues that “data shows that inequality often starts in the labour market.” Therefore a broad package of coherent labour market policies, including minimum wages, is vital to tackle inequality and ensure that economic growth benefits everyone.

The report points to International Labour Organisation data showing that changes in the distribution of wages and job losses accounted for 140% of the increase in US inequality between 2006 and 2010.

"Ensuring that the benefits of growth reach the many rather than the few is one of the great challenges of our time, and rising wages are clearly a key driver of inclusive growth. When wages remain stagnant, imposing a minimum wage is one vehicle for driving them higher," explains Jennifer Blanke, Chief Economist at the World Economic Forum.

"This of course leads to higher wages for those with jobs, but the potential downside is that employers cut jobs, leading to higher unemployment. History has shown that minimum wages that are not 'too high' have a benign effect on unemployment, and can be an effective lever (although the threshold is of course difficult to determine). Recent efforts to impose much higher minimum wages are experiments that will provide us with a better understanding of how and under what conditions they work best."

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Jobs and the Future of WorkEconomic Growth
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