Chapter VI. Final considerations and observations

I. Importance of the ILO's international instruments on minimum wages

396. The importance of these instruments stems from their central objective, namely to ensure a minimum wage to workers that will enable them to meet their subsistence needs and those of their families adequately in the context of the economic and social conditions of the country in which they live.

397. This objective is universal in character and, as already seen, constitutes a fundamental principle underlying these instruments and the Constitution of the International Labour Organisation as well. In this respect the Committee observes that both the countries that have ratified the Conventions in question and those that have not ratified them recognise the importance of their objectives and the need to ensure the right to a minimum wage either in the Constitution or in the ordinary law. Even in the case of countries that do not have any regulations on the subject, it can be observed that this objective is pursued through collective bargaining which, in most cases, constitutes an effective means of guaranteeing workers a minimum wage.

398. The Committee recognises that the working world of today has been undergoing sweeping changes caused, on the one hand, by the new national and international economic circumstances affecting a large number of countries and, on the other hand, by the transformation of a planned economy system into a market economy system in some countries. While not disregarding the fact that these changes should be taken into consideration in the application of the principle of a minimum wage for workers, and that such application must fit in with today's reality, the Committee nevertheless considers the principle to be as valid and as important as ever and that, consequently, the need still exists to respect the standards contained in the instruments and to apply them properly.

399. Doubtless, a large proportion of the world's active population is engaged in activities outside the framework of a contractual relationship. It is presumed that those to whom the minimum wage instruments apply, the wage-earning class, constitute a minority in many countries; although they represent a large majority in some countries in view of the latter's level of development. Nevertheless, this minority has an overwhelming role and importance, since its labour accounts for most of the goods and services that make up the gross national product in almost every country. (Endnote 1) This must therefore be borne in mind in assessing the importance of minimum wage fixing.

400. Finally, the number of countries that have ratified the Conventions under review, which today stands at 181, as well as the number of reports received from these countries and from those that have not yet ratified them, provide a further indication of the importance of minimum wage fixing.

II. Difficulties encountered in applying the Conventions

401. The Committee has observed that a number of governments stated that the instruments under review are applied by the law and practice in their countries and that no difficulties have been encountered in this connection.

402. Difficulties encountered in applying the instruments in certain countries result, according to the governments, from the economic and social conditions of the country, caused either by depression in their economies, which they are taking steps to redress through structural reforms, or by changes under way towards a market economy. (Endnote 2)

403. Other governments have reported that the problems stem from the workers' acceptance of wages below the established rates or from a tendency on the part of the employer to pay less than the established minimum. (Endnote 3)

404. In another case it has been stated that the problems originate in the political, social and economic changes taking place in the country which have entailed the adoption of a considerable number of new laws, including one on minimum wage fixing, and that the workers may be having difficulty in understanding these laws. (Endnote 4)

405. Other governments have referred to problems caused by the lack of adequate human and material resources to ensure effective application of minimum wage legislation, especially in connection with labour inspection. (Endnote 5)

406. One government has stated that the lack of reliable statistics on the various economic factors that should be taken into consideration is an obstacle to minimum wage fixing. (Endnote 6) Nevertheless, the Government states that the necessary measures are being taken to set up the relevant technical department.

407. The Government of another country has reported difficulties in applying the Conventions under review, caused by the small size of the country's agricultural enterprises and the fact that these rarely employ paid labour since they are essentially run by family members. (Endnote 7)

408. Two countries have referred to problems connected with Convention No. 99 as regards the partial payment in kind of the minimum wage. (Endnote 8) One of these Governments has stated that it is not planned to amend the legislation in the near future to bring it in line with the Convention but that application of the Convention is in fact guaranteed through the country's supervisory machinery. (Endnote 9)

409. The Committee is aware of the difficulties facing countries in applying the provisions of ratified Conventions. It nevertheless once again urges the Governments concerned to continue to adopt the necessary measures to apply the provisions of the ratified Conventions, so that the relevant action may be taken to bring national law and practice into line with the Conventions, extending the guarantee of a minimum wage to all workers and ensuring the actual payment of the minimum wage.

III. Prospects for ratification

410. A number of countries have stated that for the time being they are not considering ratifying any or all of the Conventions in question. (Endnote 10) The reasons given for not considering ratification vary: for example, the absence of legislation or incompatibility between current law and practice and the provisions of the Conventions, (Endnote 11) and the existence at the national level of minimum wage fixing machinery already covering the objectives of the Conventions in question, especially when one of these Conventions has already been ratified. (Endnote 12) Some governments have sent in comments from organisations of employers and workers stating that the system in force in their country complies with the objectives of the Conventions and that it is not necessary to ratify the instruments, especially since some of them have already been ratified. (Endnote 13)

411. Other governments have stated that the economic and social difficulties their countries are experiencing are disincentives to ratification of the Conventions under review. (Endnote 14)

412. The governments of other countries have stated that they are considering ratifying one or more of the Conventions in question. (Endnote 15)

413. Two Governments (Endnote 16) which have stated that they do not intend to ratify Convention No. 131 in particular explained that one of the reasons for this is that Article 2, paragraph 1, would be contrary to freedom of collective bargaining. This is because collective bargaining is the means whereby minimum wages are fixed in these countries, irrespective of any other machinery provided for in their legislation. The Governments in question consider that if they ratified Convention No. 131 they would be restricting freedom of negotiation which in one of them is even recognised in the Constitution.

414. The Committee considers that Convention No. 131 clearly makes it obligatory for a ratifying State to establish or maintain a system of fixing minimum wages to give effect to the Convention. Pursuant to Article 2, paragraph 1, minimum wages shall be given the force of law and shall not be subject to abatement. This point is all the more important where the minimum wage fixing machinery is collective bargaining which, by its very nature, tends in general to increase minimum wages, rather than lower them. The Committee therefore stresses that the principles guiding the Convention are not contrary to freedom of collective bargaining which is expressly referred to in paragraph 2 of Article 2 of the Convention, which states that freedom of collective bargaining shall be fully respected, subject to the provisions of paragraph 1 above.

415. The Committee hopes, in view of the importance of the objectives established in the Conventions in question, that governments will give due consideration to ratifying them.

IV. Concluding observations

416. The general principles on minimum wages set out in various other international instruments and in the Constitution of the ILO are worded in general terms. The ILO Conventions and Recommendations examined in the present survey provide for the framework, the actual wage fixing machinery and the broad lines of its operation, and the prior and worthwhile consultation of employers' and workers' organisations on an equal footing. The Recommendations and Convention No. 131 also specify the elements to be taken into consideration, "so far as possible and appropriate in relation to national practice and conditions" in determining the level of minimum wages. This level is closely related to the economic, social and political conditions of each country and cannot be determined outside this frame of reference. (Endnote 17)

417. Although according to the reports received nearly all countries have minimum wage fixing machinery, this machinery does not always operate or does not always correspond to that described in the legal texts. The Committee realises that it is necessary that minimum wage fixing machinery be adapted to reality and considers that the relevant legislative texts should be amended accordingly. Furthermore, as the Committee has emphasised on various occasions through comments made in connection with the application of the Conventions in question, the Committee stresses the importance of effective operation of the minimum wage fixing machinery prescribed in legal texts.

418. The minimum wage fixing machinery prescribed in national laws and regulations or encountered in practice in certain countries is very varied in character and, at times, quite complex. All this machinery appears to be equally suitable for achieving the objectives of the instruments in question in so far as it allows for the effective fixing of minimum wages. When this has not been the case the Committee has addressed comments on the subject to the governments concerned.

419. Furthermore, the information supplied has revealed that in a large number of countries exclusions are still being made in respect of certain sectors or groups of workers. The exclusion of certain sectors or groups of workers from the operation of minimum wage fixing machinery has been remedied through other machinery which provides these sectors or groups of workers with a different minimum wage from that generally applied to the rest of the workers. But there still remain sectors or groups of workers that are excluded from the general minimum wage fixing machinery and are not protected in another way. The Committee would like to emphasise once again the importance of the general application of the principle embodied in the instruments in question, allowing for the cases where these instruments provide for the possibility of fixing different minimum wages for the different sectors or groups of workers to be covered. In this respect the Committee urges States to adopt the necessary measures to bring the sectors or groups of workers who are at present excluded from the system of minimum wage fixing that is in force in the country, and to guarantee them the protection of the relevant minimum wage provisions as soon as possible.

420. The information supplied by governments does not enable the Committee to have an idea of the number or percentage of the working population actually protected by minimum wages. Consequently, as it did on other occasions, (Endnote 18) the Committee urges governments to supply information on the number of workers covered by minimum wages.

421. The consultation and participation of representatives of employers and workers or of their organisations aims at guaranteeing effective operation of minimum wage fixing machinery. The principle of consultation and participation of the social partners is a fundamental principle of the International Labour Organisation. It can reasonably be said that the majority of States attach due importance to this principle and do in fact provide for such consultation and participation in the minimum wage fixing procedures in force in their respective countries.

422. Nevertheless, the fact that the minimum wage fixing machinery in force provides for consultation and participation of the social partners does not necessarily guarantee consultation or participation in actual fact, as has been seen from the information sent in by the governments themselves or from the comments on the matter communicated by organisations of employers or workers.

423. Furthermore, as has been observed in the course of this survey, the fact of consulting employers' or workers' representatives or their organisations, or of having them participate, is no guarantee either that the consultation or participation of the social partners will be effective. In a certain number of countries, consultation or participation is a mere formality in that the employers' and workers' representatives do not have a real opportunity to present their views on the establishment or modification of minimum wage fixing machinery or its operation.

424. The consultation and participation of employers' and workers' representatives should be on an equal footing. The Committee has observed that in a number of countries, where consultation and participation does take place it has been confined only either to employer representatives or to worker representatives. Even in countries where the organisation of employers or workers is only emerging or is totally non-existent, governments should ensure that the consultation and participation of employers' and workers' representatives take place on an equal footing.

425. Consequently, the Committee strongly urges governments to take the necessary action to ensure that the consultation and participation of the social partners in the establishment and modification of minimum wage machinery or its operation is useful and effective, that is to say that these representatives are genuinely given an opportunity to express their views, in full knowledge of the facts, that their views are taken into consideration at the appropriate time, and that their consultation and participation are on an equal footing.

426. The instruments provide for the consultation and participation of qualified independent persons who are experts on minimum wage matters. The Committee emphasises the importance of consulting the employers' and workers' organisations concerned when these persons are being appointed.

427. The instruments in question contain provisions in respect of the elements that should be taken into account in fixing minimum wages. The validity and universality of these elements appear to be corroborated by the information sent in by the governments which also show that these elements have in fact been taken into consideration in fixing minimum wages or, more frequently, have been embodied in legal instruments which establish minimum wage fixing machinery. Similarly, certain countries furnished detailed information on the criteria taken into account in fixing minimum wages.

428. As recalled above, the level of minimum wages is closely linked to the economic, social and political circumstances of each country. Consequently, the weight given to each of these elements will vary from country to country according to these circumstances -- all the more so since, as already stated, the political, economic and social changes that have been taking place in a large number of countries since the 1980s tend to favour some of these elements as against others. The Committee wishes to recall once again that the fundamental and ultimate objective of the instruments in question is to ensure to workers a minimum wage that will provide a satisfactory standard of living for them and their families. It is however necessary to note that this objective is not always attained and that in some countries, allowing for the erosion of the value of money caused by inflation, minimum wages represent only a percentage of what workers really need.

429. This fundamental objective of the minimum wage systems should constantly be borne in mind when, in certain countries, structural adjustment programmes are being applied or where, in other countries, the transition is under way from a planned to a market economy.

430. It is recognised that minimum wages are an important element of the labour market, especially in ensuring a certain minimum for workers with very low incomes, and that, furthermore, minimum wages can help in achieving the aims of income redistribution. The effect of increases in minimum wages on employment, and especially on the employment of young people entering the labour market who are generally over-represented in the low wage category, has been the subject of numerous studies in the industrialised market economy countries. Some of these have revealed an adverse, though limited, effect of minimum wages on the employment of young people. (Endnote 19) In contrast, other studies on the effect on employment of minimum wages do not reach quite the same conclusions. A recent study on the situation in France, where the relative value of the minimum wage has tended to increase over the last two decades, states that increases in the real value of the SMIC have indeed raised the average earnings of young workers, "but that it is extremely difficult to derive robust negative effects on youth employment". (Endnote 20)

431. In view of the results of these studies it can be concluded that any adverse effect on employment may result not so much from the obligations imposed by the Conventions to fix minimum wages or to establish minimum wage fixing machinery as from the actual amount of the minimum wage which is determined not by the Conventions themselves but by agreement between the parties or by decision of the competent authority in consultation with the parties concerned. Even so, such adverse effect is likely only in so far as the minimum wage is unduly high in relation to what the economists call equilibrium wage levels -- although the latter notion will remain somewhat Utopian in developing countries, where it has been found that wages in general and minimum wages in particular have systematically been losing their purchasing power both in absolute and relative terms. (Endnote 21)

432. The best way of taking the various elements mentioned in the instruments into consideration and according them their due weight is no doubt by compiling the information and statistics referred to in the instruments themselves. The Committee has observed that a number of countries have developed mechanisms for compiling this information which often allow for the participation of trade unions or private bodies, with a view to using it in fixing minimum wages. In other countries, such mechanisms are in their early stages or simply non-existent. The Committee urges the governments of such countries to take the necessary measures to establish instruments and machinery that will enable them to collect the necessary information for minimum wage fixing. The Committee considers that, if necessary, these governments should request for technical assistance from the International Labour Office for this purpose.

433. The fact that minimum wages are established in each of the countries studied does not necessarily guarantee that the said minimum wages are actually paid to the workers. In view of this, the instruments prescribe a series of measures with a view to guaranteeing the actual payment of these wages. The Committee has observed in the course of this survey that the majority of countries have made provision for machinery to guarantee the actual payment of minimum wages. Nevertheless, the Committee has found that certain governments have reported that in actual fact the minimum wages that have been fixed are not observed, either because of the economic conditions prevailing in the country, (Endnote 22) or because of acquiescence on the part of the workers to receive a wage below the fixed minimum, (Endnote 23) or because there are no adequate means of supervision to ensure compliance with the minimum wages. (Endnote 24) On other occasions it has been the workers' organisations that have commented on the inadequacy in the operation of existing machinery. (Endnote 25)

434. The Committee, therefore, requests governments to make provision for adequate machinery that will allow for the supervision of the application of minimum wages once it has been established. The Committee considers that in those cases where it is recognised that an adequate labour inspection system is lacking, the governments concerned might request the necessary technical assistance from the International Labour Office to establish labour inspection services or improve existing ones since these are essential to the proper compliance with the international standards on minimum wages. In this connection the Committee recalls that on numerous occasions it has addressed comments to governments so that the latter may adopt the necessary practical measures to guarantee the effective application of provisions on minimum wages and communicate the relevant information to the International Labour Office. (Endnote 26)

435. Lastly, the Committee has observed, in the light of information examined, that a number of countries are faced with economic and social difficulties such that the existence of minimum wage fixing machinery and its implementation do not suffice to ensure that workers have the necessary incomes to meet their basic needs and those of their families. Consequently, the Committee urges governments to pay due attention to this situation.

Endnotes

Endnote 2

Endnote 3

Endnote 4

Endnote 5

Endnote 6

Endnote 7

Endnote 8

Endnote 9

Endnote 10

Endnote 11

Endnote 12

Endnote 13

Endnote 14

Endnote 15

Endnote 16

Endnote 17

Endnote 18

Endnote 19

Endnote 20

Endnote 21

Endnote 22

Endnote 23

Endnote 24

Endnote 26

Cross references
Constitution: Article 19
Constitution: Article 22
Constitution: Article 35