7 Countries Raising The Minimum Wage
Despite the brutal global recession that has gripped the world economy over the last few years, many countries have moved to increase the statutorily mandated minimum wage for workers. The countries raising the minimum wage cut across geographies and economic systems to include China, Brazil, Spain, Bolivia, Turkey and seven individual states in the United States. These increases range from 1% to as high as 21%. (For more, see The Minimum Wage: Does It Matter?)
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Although China has a reputation as an inexpensive area to manufacture goods, the country has been active in increasing its minimum wage. There is no national minimum wage, but provinces and cities set their own wages.
Beijing, which is the capital of China, recently raised its monthly minimum wage by 21% to 1,160 RMB ($176 USD), effective in 2011. This was the second hike in six months and follows a 20% increase in July 2010.
The province of Jiangsu raised its minimum wage by 15% effective in February 2011. The new rate for cities in the province that are considered tier one will be 1,140 RMB monthly. Other Chinese areas have also followed along and raised minimum wages. (For more, see Do Cheap Imported Goods Cost Americans Jobs?)
2. Hong Kong
Hong Kong just passed its first hourly minimum wage law ever, set to go into effect in May 2011. Workers will be entitled to $28 HKD per hour, or approximately $3.60 per hour. The government said that the action was taken to help reduce the income gap between the rich and poor in Hong Kong.
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3. United States
The Federal minimum wage in the United States, set under the Fair Labor Standards Act (FLSA), was last raised in July 2009, when it increased to $7.25 per hour. States are also entitled to set their own minimum wages, and many states have rates higher than the Federal level. Under the law, workers are entitled to receive whatever minimum wage is higher.
Seven states raised their minimum wages effective in January 2011. These states include Arizona, Colorado, Montana, Ohio, Oregon, Vermont and Washington. After these increases, 17 states and the District of Columbia will have a minimum wage above the Federal level.
The highest minimum wage among the fifty states is in Washington, which has set a rate of $8.67 per hour. Oregon has the second highest at $8.50 per hour. Many of the states raised their minimum wage because existing state law pegs the wage to an index.
In Washington, the rate is based on the Federal Consumer Price Index for Urban Wage Earners and Clerical Workers. This index is up by 1.4% since August 2009, necessitating a 12 cent increase in Washington's minimum wage. (For more, check out The Consumer Price Index: A Friend To Investors.)
Brazil also raised its minimum wage, with the process falling victim to politicking in that emerging country. The outgoing government, which left office on December 31, 2010, raised the minimum wage by approximately 6% to 540 BRL a month ($321 USD) effective in 2011.
After Dilma Rousseff, the newly elected President of Brazil, took office on January 1, 2011, she increased the minimum wage to 543 BRL/month. This decision came after a political party with a large presence in the country's legislature lobbied publicly for a larger increase.
In Bolivia, the government reduced fuel subsidies by hundreds of millions of dollars, sparking large protests in that country. Evo Morales, the leftist leader of that country, then raised the national minimum wage by 20% in order to quell the anger over the higher price of refined products.
The Socialist government in Spain introduced some severe austerity measures in 2010 and 2011 to deal with perceptions that the country was spending too much money and incurring excessive debt. Despite these austerity measures, Spain also raised its minimum wage by 1.3%, from 633.3 to 641.50 euros per month.
Turkey recently passed a two phase increase in the monthly minimum wage. In January 2011, the wage will increase to 796.5 TL ($515 USD) per month, up 4.7%. The rate will increase an additional 5.1% in July 2011 to 837 TL per month ($540 USD).
Although a 10% increase in the minimum wage might seem generous considering the current economic conditions, many in Turkey were not happy. Trade unions in Turkey led protests against the new minimum wage, calling it inadequate and leaving workers earning this wage living below the poverty line. (For more, see Unions: Do They Help Or Hurt Workers?)
The Bottom Line
A number of countries have recently helped its poorest workers through an increase in the legal minimum wage. This was done to help narrow income inequalities and help maintain purchasing power in the face of higher inflation.
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