Minimum wage policy guide

Minimum wages: an introduction

ILO expert on wages Patrick Belser
Reducing inequality and promoting decent work for all women and men have been identified as key objectives in the 2030 Sustainable Development Agenda, adopted at the United Nations in 2015.

The 17 Sustainable Development Goals (SDGs) seek to balance the three dimensions of sustainable development: the economic, social and environmental.

Goal 8 calls for “sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”, and highlights the importance of achieving equal pay for work of equal value, and protecting labour rights.

Goal 10 seeks to “reduce inequality within and among countries”, emphasizing income growth of the bottom 40 per cent of the population, the elimination of discrimination, as well as the adoption of policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality.

Well-designed and effective minimum wages can contribute to these objectives. They can help to ensure “a just and equitable share of the fruits of progress to all”1 and “a minimum living wage to all employed and in need of such protection”.2

Poorly designed minimum wages, by contrast, can put workers’ well-being at risk, undermine effective implementation, and risk encouraging informality.

The present policy guide builds on existing ILO labour standards, the latest global review of national laws and practices undertaken at the ILO,3 as well as on years of experience accumulated in the context of ILO cooperation with Governments and social partners around the world.

The guide reflects the diversity of international practices and the different choices that can be made, depending on national preferences and country circumstances. It does not seek to promote a single model on all countries. It does however emphasize key principles of good practice, and provides examples on the pros and cons of different policy options.

Finally the guide emphasizes another key SDG principle – partnership.

When it comes to minimum wage fixing, only social dialogue and collective bargaining can help strike the balance between the legitimate needs of both workers and enterprises.

1 See the Resolution concerning the recurrent discussion on social protection (labour protection)
2 See the ILO Declaration on Social Justice for a Fair Globalization
3 ILO, 2014, “Minimum wage systems”, General Survey of the reports on the Minimum Wage Fixing Convention, 1970 (No.131), and the Minimum Wage Fixing Recommendation, 1970 (No.135). As well as the Outcome of the tripartite discussion of this report.