How many different minimum wage rates should there be?
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Across the world, minimum wage systems are diverse and many approaches are possible, depending on the needs and choices of individual countries.
Some countries have only one minimum wage applied to all employees in the country; others have multiple minimum wage rates by sector of activity, occupation, or geographical region.
- Simple systems are easier to operate, communicate and enforce, but offer less scope to take into account the particular circumstances of different regions or sectors within a country.
- More complex systems can be better tailored at the circumstances of different sectors or regions, but require more institutional capacity. Systems that are overly complex tend to lose their effectiveness, and may in some instances interfere with collective bargaining between workers and employers.
Compliance with the principle of equal remuneration for work of equal value should be ensured, particularly when minimum wages are set by sector or occupational category. There may be discrimination, for example, when minimum wages are systematically lower in female-dominated sectors. Similarly, it is important to avoid wage discrimination against migrant workers and workers with disabilities.
There is also a link between equal pay for work of equal value and the existence in some countries of reduced minimum wages applicable to young workers below a certain age, set with a view to facilitating their entry into the labour market.
Within the specific circumstances and policy objectives of each country, it is recommended to keep minimum wages "as complex as necessary but as simple as possible", and to avoid wage differentiation between different groups of workers which is not based on objective valid reasons, such as educational objectives, work experience or skills. Minimum wage systems should also leave space for the determination of wages through collective bargaining.