Minimum wage: problems of inequality and social justice

Abstract

Work associated with low wages, close to the minimum level, creates prerequisites for inequality and the release of a much larger number of employees from the intra-company labor market than for people with competitive earnings. The position is substantiated, according to which the restraint of wage growth is due to the method of achieving economic efficiency and the lack of social justice based on the use of cheap labor, the weakness of the local labor market and the low level of bargaining power, which is characterized by the effect of snobbery. The authors point out that trade unions, as active participants in the social dialogue, do not exert proper influence on political processes in order to establish optimal and reasonable minimum wage rates. The analysis showed that in extremely uncompetitive labor markets, where there are usually low wages, prerequisites for income inequality are formed and minimum wage legislation could help provide a certain compensatory force in support of unorganized workers, as well as achieving social justice. It is proved that employers do not make decisions about hiring in a vacuum, and institutional and political frameworks can play an important role in influencing the formation of demand for labor. In addition, the national minimum wage has not been sufficiently revised and adjusted in recent years, taking into account economic development, institutional and political factors, and may become a "permanent rate" for many low-paid jobs in the absence of collective bargaining and limit the growth of real earnings. The study shows that the minimum wage has the potential to destroy jobs for low-skilled workers and creates an institutional environment of "winners" and "losers" despite the fact that most of the workforce has access only to poor and low-paid jobs, which are characteristic of the Russian model of the labor market with a high level of employment. It is recommended to create effective jobs in the economy based on the institutionalization of education and the growth of professional and qualification growth.