Minimum Wage

Many countries set a minimum wage to protect low-paid workers, reduce poverty and ensure that work pays enough to live on. It acts as a price floor in the labour market.

For example, if the minimum wage is 12 an hour, an employer cannot legally pay a worker 10 an hour, even if the worker would accept it. A full-time worker on 40 hours a week at the minimum wage earns at least 480 a week before tax.

The economic effects of minimum wages are debated. Supporters argue that they raise the incomes of low-paid workers, reduce inequality and can increase spending in the economy. Critics argue that if the minimum is set too high, some employers may hire fewer people, reduce hours or replace workers with machines, particularly affecting young and less experienced workers.

Research suggests the effects depend on how high the minimum wage is relative to typical wages in the area, how quickly it is increased and the state of the labour market. Many countries adjust their minimum wages regularly to keep pace with prices and wages.