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 ?
In the following sections, we begin by describing the construction of our database of minimum wage rates and legislative histories.
Therefore, it cannot be ruled out that far too drastic measures are taken: in this case, the magnitude of the binding minimum wage rate could cause employment to drop to the level of a 'pure monopsony':
Prime Minister Ahmet Davutoy-lu promised they would increase the minimum wage rate to TL 1,300 (approximately $450) from its current level of TL 1,000 ($350).
The application of maximum wage rates would help provide the budget with additional resources to implement minimum wage rates as well, Al-Gamal added.
However, there is worrying evidence that a significant number of employers are not paying apprentices the relevant minimum wage rate.
Around 2009, all provinces except British Columbia increased their minimum wage rates, which in turn, increased the number of Canadian workers working at minimum wage to 5.8%, or some 817,000 people.
Wages payable to an employee in respect of any wage period, when averaged over the total number of hours worked during that time, should be no less than the statutory minimum wage rate of $28, according to the minimum wage ordinance.
The Egyptian Trade Union Federation was also holding a meeting over the minimum wage rate and whether it could file a lawsuit against the Government decision.
At that rate, Oregon's lowest-paid workers are roughly on an inflation-adjusted par with the federal minimum wage rate 40 years ago.
He said New Hampshire is the only state in the Northeast whose minimum wage rate is just $5.15 an hour.
Ministers have accepted a report from the Low Pay Commission that will see the adult minimum wage rate increase from pounds 5.05 to pounds 5.35, the rate for 18-21s from pounds 4.25 to pounds 4.45, and for 16 to 17s from pounds 3 to pounds 3.30 from October 2006.
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.