Minimum-Wage Fixing and Economic Development

Abstract

Though coverage and effectiveness of enforcement vary widely, most developing countries now have some system, national or sectoral, of state regulation of minimum wages.² Indeed, regulation of minimum wages is one of the main instruments available to governments that wish to influence the level and structure of wages. Four possible purposes of minimum-wage fixing may be distinguished to bring the lowest wages up towards the general level of wages paid for similar work; to exert upward pressure on the general level of wages as a whole; to eliminate ‘unfair competition’; and to serve as one among a number of instruments of a comprehensive policy aimed at promoting rapid growth and fair sharing of the national income.

This paper draws freely on an unpublished I.L.O. report entitled ‘Minimum-Wage Fixing and Related Problems with Special Reference to Developing Countries’ [roneoed (Report I for a meeting of experts on this subject) (Geneva 1967)] hereafter referred to as ‘Minimum-Wage Fixing’. In the interests of brevity, almost all examples and illustrations, which are fairly abundant in the report, have had to be excluded from the paper. Attention may also be drawn to the report of this meeting, roneoed document M.E.M.W./1967/D.8 (I.L.O., Geneva 1967).