Chapter 4: Who should be getting minimum wages

4.6 Public sector employees?

In many countries, public sector employees are excluded – in whole or in part – from the scope of labour laws, including provisions on minimum wage fixing. However, this does not imply that no minimum wage applies to them since administrative laws or arrangements, which often include pay scales, can cover them. Lower pay scales are normally adjusted to be set no lower than the minimum wage.

For example, in October 2015 in Malaysia, the government announced a minimum wage for public sector employees which would enter into force July 1, 2016. This announcement was made independently from the National Wages Consultative Council, the body responsible for recommending minimum wages to the Government for the private sector.

By contrast, in some countries laws regulating minimum wages clearly state that public sector workers are included. For example, the minimum wage legislation applies to public workers in the Bahamas. Act No. 1 of 2002 on Minimum Wages in Commonwealth of the Bahamas and states that the Act includes “… any such employment by or under the Crown in right of the Government of The Bahamas...”.1

One concern is thus not the total exclusion of these workers from any minimum wage fixing machinery, but the possible lack of consultation with the social partners, and particularly with representative organizations of workers concerned.
Legal requirements to consult can vary by country. For example, public sector unions in Japan, by law, must be consulted regarding pay related issues. This is not the case in Chile, where there is no binding obligation to consult public sector trade unions regarding any employment issue, including wages.

Another area of concern is the influence that an increase in the minimum wage could have on public sector spending. If the minimum wage increases, the wages of those who earn less than the newly proposed rate will also increase. In some cases however, minimum wages act as a multiplier for higher wages within the public sector. In these cases, an increase in the minimum wage can have far reaching implications for public expenditure on public sector pay.

For more detailed information, see Chapter 2 of the ILO General Survey on minimum wage systems, 2014.

1 Act No. 1 of 2002 on Minimum Wages, Application of Act, Section 3. (1)