minimum wage rate


Also found in: Acronyms.

minimum wage rate

the minimum rate of PAY for work either decreed by the government or voluntarily agreed between trade unions and employers. Minimum wage rates are designed to ensure that workers are able to enjoy some basic standard of living.

In April 1999 the UK government introduced a statutory national minimum wage rate of £3.60p per hour for employees aged 22 and over and £3 per hour for employees aged 18-21; these rates have been increased progressively to £5.05p and £4.25p, respectively (as at October 2005). Many other countries have similar legislation. The minimum wage rate selected tends to reflect the outcome of a ‘compromise’ between various vested interests, the trade unions, employers and the government. Given the diversity of conditions in the LABOUR MARKET the introduction of a single economy-wide minimum wage is open to the objection that it will rarely correspond to ‘market-clearing’ rates in individual industries and trades. In particular, critics argue that pitching the wage rate too high (i.e. above the ‘market clearing’ rate) will tend, as noted above, to increase unemployment in many unskilled occupations. Moreover, there are practical complications relating to the imposition of the minimum wage rate where employees are traditionally paid on a ‘piece-rate’ basis rather than by the hour.

Minimum wage rateclick for a larger image
Fig. 123 Minimum wage rate.

minimum wage rate

the minimum rate of PAY for LABOUR either decreed by the government or voluntarily agreed between trade unions and employers. Minimum WAGE RATES are designed to ensure that workers are able to enjoy some basic standard of living, thus correcting the MARKET FAILURE of low wages. However (as shown in Fig. 123), if wage rates are set much above the ‘equilibrium rate’, We, the effect is to reduce the demand for labour (from Qc to Qm ). Thus, although those who remain in work (OQm) are now better off, those persons who are made unemployed as wages rise (Qm Qc) are worse off.

In April 1999 the UK introduced a statutory minimum wage rate of £3.60 per hour for employees aged 21 and over and £3 per hour for employees aged 18–20; currently (as at October 2005), these rates are £5.05 and £4.25 per hour, respectively. In October 2004 the minimum wage was extended to 16- and 17-year-olds at a rate of £3 an hour. Many other countries have similar legislation. The minimum wage rate selected tends to reflect the outcome of a ‘compromise’ between various vested interests, the trade unions, employers and the government. Given the diversity of conditions in the LABOUR MARKET, the introduction of a single economy-wide minimum wage is open to the objection that it will rarely correspond to ‘market-clearing’ rates in individual industries and trades. In particular, critics argue that pitching the wage rate too high (i.e. above the ‘market clearing’ rate) will tend, as noted above, to increase unemployment in many unskilled occupations. Moreover, there are practical complications relating to the imposition of the minimum wage rate where employees are traditionally paid on a ‘piece-rate’ basis rather than by the hour. See TRADE UNION, SUPPLY-SIDE ECONOMICS, MARGINAL-REVENUE PRODUCT, PROFIT-RELATED PAY.

References in periodicals archive ?
If the government increases further the minimum wage rate (for example to a level of [?
In more realistic scenarios, many workers will switch to the unofficial sector and be paid less than the official minimum wage rate.
The application of maximum wage rates would help provide the budget with additional resources to implement minimum wage rates as well, Al-Gamal added.
The Low Pay Commission is currently consulting on possible changes to the minimum wage rate.
He said New Hampshire is the only state in the Northeast whose minimum wage rate is just $5.
Though the new minimum wage rate will add nearly $2,100 annually to some paychecks, it still falls nearly $7,700 short of the self-sufficiency standard for a four-person household and $4,200 short for a single-person household.
Ministers have accepted a report from the Low Pay Commission that will see the adult minimum wage rate increase from pounds 5.
More modest wage increases than those sought by the Union were achieved, and a start rate for new employees at 80% of the minimum wage rate for current employees for a period of 30 months was instituted, as well as a vacation relief rate of 60% of the minimum wage for regular employees.
Teams of officers from HM Revenue and Customs swooped on firms illegally paying workers below the minimum wage rate.
It has Central America's second lowest inflation rate, and second best minimum wage rate.
X, [section] 24 of the Florida Constitution, increased the minimum wage $1 above the federal minimum wage rate to $6.
Of the current Member States, the lowest monthly minimum wage rate was found in Latvia (Euro 121), Lithuania (Euro 125) and Slovakia (Euro 148).

Full browser ?