Statutory minimum wages

Learn more about centralized and decentralized wage boards

How multiple minimum wage rates are set varies from country to country. In some cases, minimum wage systems with multiple rates are uprated by a single national-level commission. In cases where the system is very complex, this could prove challenging for a single high-level wage-setting commission. The commission would, in principle, need to understand the intricacies of each individual occupation, region and/or sector where a minimum wage is set.

In practice, however, adjustments are sometimes uprated using the same percentage increase across the whole minimum wage structure. In practice, the application of a uniform percentage increase to all minimum wages crystallizes the relative structure between the different minimum wages. Consequently, after several years, the minimum wage structure no longer adequately reflects actual labour market trends or the economic development of different sectors of activity.

In these cases a more decentralized process, coordinated at a higher level, would usually be a more appropriate approach. Minimum wages by sector and/or occupations would be set through the active participation of social partners, at a decentralized level, but under the general coordination of a tripartite commission at the national level. Specific minimum wage uprates can then be determined and informed by the social partners’ direct knowledge of the particularities of a certain sector, region, and/or occupation.