The Revival of Minimum Wage Setting Institutions

Abstract

The minimum wage is a labour market institution used in the majority of countries throughout the world. This is illustrated by the fact that a large number of countries, 116 in total, have ratified one or both of the two ILO minimum wage fixing Conventions.1 In addition, many more countries have established minimum wage fixing procedures, even though they have not ratified these Conventions.2 The minimum wage has had a long and turbulent history. Today, after decades of being dismissed as a social and economic policy tool, the minimum wage is now back in favour, in part thanks to the many impact studies which have adopted a more objective approach in dealing with the issue. This chapter will show that, contrary to widespread belief, the minimum wage is commonly used by governments and social partners in developing countries. Amongst the most noticeable and promising changes in recent legislation are the attempt to extend coverage and also the more careful use of economic and social criteria for adjusting the minimum wage.