Minimum wages key to cutting working poverty, says ILO

GENEVA (ILO News) – The International Labour Organization (ILO) has called on its 185 member states to adopt minimum wage policies as a way of reducing working poverty and providing social protection for vulnerable employees.

“Minimum wages help protect low-paid workers and prevent a fall in their purchasing power, which in turn hurts domestic demand and the economic recovery,” said ILO Director-General Guy Ryder.

Minimum wages help protect low-paid workers."

According to the ILO’s Global Wage Report 2012/13, minimum wages provided social protection for the most vulnerable workers in many developed economies at the beginning of the crisis while later they were only adjusted to inflation, at best.

And in Greece, the minimum wage was cut by a dramatic 22 per cent. This was part of the conditions set by official creditors to release bailout funds.

On the other hand, many developing and emerging economies have used minimum wages as a continuing way of protecting the most vulnerable. Brazil, for example, raised its minimum wage considerably, starting in 2005 and continued to do so even during the worst months of the crisis.

But the truth is that the number of working poor in developing countries remains extremely high. The latest figures show that hundreds of millions of wage earners in developing economies earn below US$ 2 per day.

A decent wage is one of the simplest and most direct ways of preventing a rise in working poverty."

But it’s not just in developing economies that some wage earners live in poverty. The working poor make up over 7 per cent of all workers in the United States and 8 per cent in Europe.

“A decent wage is one of the simplest and most direct ways of preventing a rise in working poverty. It is up to each country to set the right level but this is too important a tool for any country to disregard,” said Ryder.

Minimum wages should take into account “the needs of workers and their families as well as economic factors, including levels of productivity, the requirements of economic development and the need to maintain a high level of employment,” the ILO report says.

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