Present Minimum Wages Scenario in India, Middle East and Europe

Quite a politically charged issue in world employment market is the impact of minimum wages on economics based on employment. The minimum wage concept has in the recent times become a confusing thing for many commoners. This bit of confusion has been sparked off by the supporters as well as the critics of the concept. The supporters that say minimum wage elevates living standard of workers by reducing poverty and inequality along with the critics of the concept who aver it increases poverty, unemployment and business damage, only result in obscuring the thought of the common people regarding the minimum wage concept. The argument of the critics of the concept to support their stand is that minimum wages that are excessively high, press the businesses to raise their commodity or service prices for accommodating the additional expense of higher wage paid to the worker.

What is Minimum Wage?

A minimum wage is technically the lowest remuneration; the workers can be legally paid by their employers. From another angle, this can also be considered as the price floor below which employees would not sell their hard work. Despite the fact that many countries in the world have brought to effect minimum wage laws in their jurisdictions, opinion differences on the advantages and disadvantages of the concept are still prominent. The minimum wages movement was first motivated with a view to stopping workers’ exploitation in workhouses by employers that arguably had unfair bargaining power over their workers.

Interestingly, Australia and New Zealand were the first countries to pass modern national legislation proscribing minimum wages through compulsory union membership. However, by the end of the twentieth century, most countries of the world had introduced minimum wage laws.

When do Minimum Wages turn advantageous?

In the case of a labour market that is seldom the perfectly competitive type, the minimum wages can boost the market’s efficiency. For example, in a labour market where monopsony (single buyer market) prevails a modestly set minimum wage could boost the wages considerably along with the market’s employment opportunities and economic efficiency.

The Indian Minimum Wages Concept

As the Constitution of India defines a living wage for the worker, which is an income level capable of ensuring a basic standard of living highlighted by education, comfort, dignity, good health and provision for any contingency, The Minimum Wages Act 1948 of Parliament sets the minimum wages ought to be paid to skilled as well as unskilled labours. However, even while keeping in mind the Constitution’s definition of fair wage that is the capacity of an industry to pay; the real fair wage still stays that wage level that not only maintains an employment level but also seeks to boost it keeping in perspective, the capacity of the industry to pay.

Although, the aim of the policy-makers from the very inception of the concept of minimum wages was the setting up of a uniform remuneration level across India, in the present times nevertheless 42 percent of all wage earners in the country get wages much below the stipulated floor rate of the national minimum wages. The main issues being the many regional differences over the patterns of consumption, employers’ paying capability, employees’ requirements etc, an ideal policy could not be connected to the reality yet.

The Middle East Scenario

Although there has been surging interest in the role played by minimum wages in maintaining social justice, through the low-income workers’ living standard promotion and the reduction of inequality in the income distribution among society’s various segments, the prominent Middle East country of UAE still lacks a decent minimum wage regulation. While Saudi Arabia, Kuwait, Qatar, Lebanon, and Oman are among the minimum wages states of the Middle East, the UAE strangely continues to disown it.

In spite of many countries in the Middle East having resorted to a uniform minimum wage policy without discriminating between sectors, the high proportion of employees in the informal sector besides the spread of family employment have resulted in a dip in the role of minimum wages played in economic redistribution. This imbalance can be addressed by the Arab countries however by the provision of social safety nets apart from the implementation of a minimum wage reform. This way they reap both policies’ benefits in terms of backing aggregate demand and poverty and social inequality alleviation.

Minimum Wages impact in the European Market

Out of the twenty-eight EU States, twenty-two has introduced a minimum wage, boasting it to be a crucial pillar in the building of a social Europe. However, massive differences across the countries are fuelling stubborn resistance from the part of opponents as well. These opponents see the policy of leveling down salaries as slowing competitiveness and ultimately sovereignty itself. Then only six EU states have introduced a legal minimum wage.

The discrepancies are steep among the countries with employers often finding the set minimum wage too high while workers’ unions are uniformly maintaining a high pitch for increasing the wage limit. In reply, the bosses cry that any wage hike from the present point would end up destroying the weakest companies. The unions of Luxembourg are pressing for a ten percent wage hike while in Romania where the minimum pay had doubled from Euro 700 to Euro 1,450, the employers are complaining they end up often slashing jobs or opting to pay the workers under the table.

In contrast, economically downsized Greece saw its minimum wages slump from Euro 877 to Euro 684 in 2012 with the government of Alexis Tsipras being unable to fulfill a pledge to boost it. In Germany before the declaration of the minimum wages in the year 2015, a warning of mass resultant lay-offs was sounded by the rightwing parties and certain economists.