A minimum wage ensures that a person earns the least amount required to sustain in a country. It is the lowest compensation that an employer must pay their employees per hour of work.
There are differences in the minimum wage by country. Comparing the different countries in the world, we have the lowest minimum wage and the highest.
Most countries have a government-mandated minimum wage on an hourly work basis. But countries like France, Luxembourg, Malaysia, Ukraine, Romania, etc., provide hourly and monthly minimum wages.
However, the United States and the United Kingdom provide hourly minimum wage only. Whereas Malta provides only a weekly minimum wage.
In this blog, we’ll tell you about minimum wages worldwide – benefits and drawbacks, countries with the highest minimum wage, the ones with the lowest minimum wages, and countries without a minimum wage.
The Pros and Cons of Minimum Wage
Minimum wages are globally accepted as a vital part of an economy. It combats poverty and ensures security within an economy.
But having the highest or lowest minimum wages have both pros and cons.
Improves employee retention
Higher minimum wages can help businesses retain employees. For example, Amazon had planned to raise its minimum wage to $15 per hour for all employees. While opponents of minimum wage hikes were against it, researchers at Harvard Business School suggested that it may increase productivity. As a result, Amazon would be able to retain employees, impacting the company’s bottom line positively.
Boosts employee performance
Raising minimum wages reduces absenteeism. When employees get a higher hourly wage, they are motivated to work better, and their productivity levels increase. For example, a study showed that as the minimum wage increased by 6% (from ($6.79 to $7.21) on January 1st, 2009, workers’ productivity (output per hour) increased by about 4.6%.
Easy to set small business budgets
With a minimum wage policy in the country, small businesses can easily set their budgets. They will know the minimum amount they must pay for each hour to their employees. Hence, small business employers can set aside appropriate funds for new jobs and salaries.
Easy and better hiring process
A rising minimum wage or setting a minimum wage policy can make hiring more easily for employers. They can get the right people for the right jobs. Moreover, skilled employees will get what they deserve.
Countries with the highest minimum wage in the world generally have smoother hiring processes. The employees know what salaries they can expect. Thus, employers can avoid the salary negotiation part.
Higher demand for goods and services
An increase in demand for goods and services will positively impact lower-income households. This is because low-income households mostly spend a large percentage of their income. With higher minimum wages, their demand can increase, leading to a stimulative effect on the economy.
Increase in labor costs and inflation
A rise in minimum wages will increase the overall labor cost and result in inflation. Businesses will, thus, increase the prices of goods and services, which, in turn, reduces the purchasing power of consumers.
Inflation in the economy will reduce the demand for goods and services. As a result, it will reduce sales and overall revenue of businesses. This, in turn, will force companies to lay off employees to lower business costs, leading to unemployment.
Decrease in job benefits
An increase in the minimum wage may result in businesses reducing employee benefits. Further, they can cut on-the-job training sessions, rewards, bonuses, incentives, etc. to adjust the overall cost.
The Lowest Minimum Wage Countries
If you are thinking about what country has the lowest minimum wage, then let us tell you that several countries have minimum wages below $500 monthly. Here are a few of them.
The minimum wage in Guatemala varies by sector. The workers in the agricultural sector receive $10.65 (81.87 Guatemalan quetzales) per day. At the same time, factory workers receive $9.75 per day. The annual minimum wage in the country is $2734.
The government-regulated minimum wage in Kyrgyzstan is $14 (970 Kyrgyzstani som) per month. That would make an annual minimum wage of $168 (11640 Kyrgyzstani som).
The National Minimum Wage Board of Bangladesh decides the minimum wage for each sector every five years. Considering countries by minimum wage, Bangladesh still has one of the lowest wages. The garment sector workers receive a $68 per month minimum wage, whereas, the economic sector pays a $19 per month minimum wage.
The public sector employees in Georgia are eligible for a minimum wage of $48 (115 Georgian lari) per month. But the minimum wage for private sector workers is $8 (20 Georgian lari) per month. Thus, the public and private sectors greatly differ in their minimum wages. While public sector employees earn an annual wage of $576, private sector workers earn $96 per year.
The government-mandated minimum wage in Ukraine increased in January 2020 by 550 UAH or $22 approx. Currently, the minimum wage in the country stands at $190 (4723 UAH) per month.
As of January 2022, the monthly minimum wage in Russia amounted to 13890 Russian Rubles, that is, $177 to 180 approx.
The Colombian government sets the minimum wage in the country at the beginning of every year. The 2022 minimum wage in the country is $175 (689 Colombian pesos) per month.
The government in Brazil sets the minimum wage annually. Though there is a federal minimum wage, the amount varies by state. However, the minimum wage in each state must not be lower than the federal wage.
As of 2022, the Brazilian government set a federal minimum wage of BRL 1212, that is, $217.18 per month.
Costa Rica has no government-mandated minimum wage for workers. The pay rate is agreed upon by direct collective bargaining with the employer or other fair negotiation means.
The country’s minimum wage is the least amount workers can be paid legally. The minimum wage ranges from $14.88 (9,598.73 Costa Rican colón) for the general workforce to $19.44 (12,537.91 Costa Rican colón) for a specialized workforce per eight-hours workday.
Note: Costa Rica’s minimum wage was last changed on July 1st, 2015.
The minimum wage in the Czech Republic is $654 per month as of the first quarter of 2022. With effect from January 1st, 2022, the minimum wage in the country was increased by 1000 Czech koruna, from 15,200 CZK to 16,200 CZK monthly.
The Countries with average minimum wages
Considering the average minimum wage by country, we have listed a few important ones with minimum wages between $500 to $1000 per month.
As of January 2022, the net minimum wage in Taiwan is NT$25,250 per month or US$912 approx. The hourly minimum wage rate is NT$168 or US$6.07.
Croatia has a government-mandated minimum wage of 4,648.42 Croatian kunas or $700 approx. Per month.
The nationwide minimum wage in Greece is €683.76 or $776 per month in 12 payments, €586 or $665 per month for 14 payments. The per hour minimum wage rate is €4.23 or $4.80.
In South Korea, as of 2022, the minimum wage is 9160 KRW/Hour or $1122 per month.
The minimum wage in Spain is €764.40 per month or $867.62 for 12 payments and €655.20 per month or $743.67 for 14 payments.
The nation-wide minimum wage rate in Portugal is €618 per month or $680 in 12 payments or €530 per month or $593 in 14 payments.
Among the Baltic States, Estonia has the highest national minimum wage. As of 2022, the minimum wage of Estonia is €654 per month (gross) or $700 approx.
The Highest Minimum Wage Countries
Like the lowest minimum wages, there are countries with the highest minimum wages in the world. A few of the important ones are:
Ireland is one of the countries with the highest minimum wage in the world. As of 2022, the minimum wages in Ireland increased to €10.5 or $10.539 per hour. The national minimum wage per month in Ireland remains fixed at €1,774.5 or $1775.87 approx. in 2022, considering 12 payments per year.
In 2022, the national minimum wage in Germany is €1,621 or $1622 per month, that is, the per year minimum wage in the country is €19,452 or $19,464.
The minimum wage rate in the UK is categorized based on age groups. As of April 2022, the hourly minimum wage rates are:
- £9.50 for ages 23 and over
- £9.18 for ages 21 to 22
- £6.83 for ages 18 to 20
- £4.81 for ages under 18
- £4.81 for apprentices
Note that the minimum wage rate per hour changes every April 1st in the UK.
In 2022, the national minimum wage in France will be €1,603.1 per month or $1600.78 approx. The annual minimum wage is €19237 or $19208, considering 12 payments per year.
The current minimum wage rate in Canada as of April 2022) is 15.5 CAD/Hour or 1908.72 USD/Month.
In an 8-hour work day, the current minimum wage rate in New Zealand, as of the year 2022 is:
- Adult – $21.20 per hour
- Starting – $16.96 per hour
- Training – $16.96 per hour
With effect from July 2022, Australia’s national minimum wage rate has been $21.38 per hour before taxes. In 2021, the minimum wage in Australia was $20.33 per hour or $309040 per month.
The minimum wage per month in the Netherlands, as of 2022, is €1,725.00 or $1724.29 for full-time employees 21 years or older.
As of July 2021, the Central Minimum Wages Council increased the minimum wage rate to 930 yen or $8.40 per hour.
Though there is no official minimum salary in Denmark, as of 2022, the average minimum wage in the country is 110 DKK per hour or 14.77 USD.
Countries with minimum wages require businesses to comply with the government-regulated minimum wages.
For employers planning to hire internationally, paying the minimum wage in other countries for legal compliance is the top priority. However, tracking the current minimum wage in different countries is difficult.
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