ILO RDW Conference Special Session on Minimum Wages

ILO RDW Conference Special Session on Minimum Wages Towards a Classification of Minimum Wage Fixing Machinery Dr. Janna Besamusca University of Amsterdam This project has received funding from the European Union's Horizon 2020 Research and Innovation Programme under Grant Agreement no 730998

Minimum Wages as a policy instrument Ø Inclusive growth and decent wages Ø Poverty reduction Ø Impetus for collective bargaining and social dialogue Ø Create a level playing field for good employers (Eyraud and Saget 2005; ILO 2014; Varkkey, Korde, and Singh 2016; Tijdens & van Klaveren) www. inclusivegrowth. eu www. inclusivegrowth. be 2 Geneva, 8 July 2019

Minimum Wage Conventions Convention No. 26 Convention No. 99 Convention No. 131 Year of adoption 1928 1951 1970 Entry into force 14/Jun/30 23/Aug/53 29/Apr/72 Number of ratifications 103 52 52 Status quo (no longer fully up to date but relevant in certain respects) Up to date Principle obligation Create or maintain machinery whereby minimum rates of wages can be fixed Trades or parts of trades in which no arrangements exist for the effective regulation of wages and wages are exceptionally low Create or maintain adequate machinery whereby minimum rates of wages can be fixed Workers employed in agricultural undertakings and related occupations Establish a system of minimum wages Role of social partners Consultation or participation in equal numbers and on equal terms Consultation or participation on a basis of complete equality Criteria for fixing minimum wages No No Full consultation. Wherever appropriate, direct participation on a basis of equality Yes Periodical adjustment No No Yes Binding force Yes – Possible derogation by collective agreement subject to the general or particular authorization of the competent authority Yes – The competent authority may permit exceptions in individual cases to prevent curtailment of the opportunities of employment of workers with disabilities Yes Scope of application Enforcement measures All groups of wage earners whose terms of employment are such that coverage would be appropriate Yes Source: (ILO 2014) www. inclusivegrowth. eu 3 Geneva, 8 July 2019

The ICTWSS Database on Institutional Characteristics of Trade Unions, Wage Setting, State Intervention and Social Pacts (ICTWSS). The ICTWSS database (1960 -2017) covers four key elements of 51 modern political economies: trade unionism, wage setting, state intervention and social pacts. Growth of the database to include all OECD and EU member states – with Brazil, China, India, Indonesia, Russia, and South Africa has led to some methodological challenges. www. inclusivegrowth. eu 4 Geneva, 8 July 2019

ICTWSS (NMW) One item measure the existence of a statutory minimum wage and its scope NMW: National Minimum Wage 0 No statutory minimum wage 1 Statutory minimum wage in some sectors (occupations, regions/states) only 2 Statutory national (cross-sectoral or inter-occupational) minimum wage exists. www. inclusivegrowth. eu 5 Geneva, 8 July 2019

1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Minimum wages 1960 -2017 Statutory MW from 20% to 80% No MW reduced from 50% to 15% 120% 100% 80% 60% 40% 20% 0% www. inclusivegrowth. eu 6 Geneva, 8 July 2019

ICTWSS (Government intervention) NMWS: Minimum Wage Setting 0 No statutory minimum wage, no sectoral or national agreements 1 Minimum wages are set by (sectoral) collective agreement or tripartite wage boards in (some) sectors; 2 Minimum wages are set by national (cross-sectoral or inter-occupational) agreement (“autonomous agreement”) between unions and employers; 3 National minimum wage is set by agreement (as in 1 or 2) but extended and made binding by law or Ministerial decree; 4 National minimum wage is set through tripartite negotiations; 5 National minimum wage is set by government after (non-binding) tripartite consultations; 6 Minimum wage set by judges or expert committee, as in award-system; 7 Minimum wage is set by government, bound by a fixed rule (index-based minimum wage); 8 Minimum wage is set by government based on a fixed rule (index-based minimum wage) or target (growth, employment, poverty), but government can (and sometimes does) take a discretionary decision; 9 Minimum wage is set by government, without a fixed rule. www. inclusivegrowth. eu 7 Geneva, 8 July 2019

Measurement issues NMW – Lack of discriminatory ability in recent years – Unable to distinguish between single and multiple rates in a country or region – Unclear threshold for ‘some sectors/occupations/regions’ NMWS – Hard to classify typology due to inclusion of role of government, as well as social partners and updating procedures – Little guidance on practice versus law www. inclusivegrowth. eu 8 Geneva, 8 July 2019

Challenges • How do we measure the policy intent: minimum wages as a wage floor or wage politics? • Do we measure the legal (paper) reality or application in practice? • How to deal with the informal sector? Look into the dimensions identified by previous research and in other surveys (ILO, Eurofound, Wage. Indicator) www. inclusivegrowth. eu 9 Geneva, 8 July 2019

A classification taking account of policy intent Policy intention Floor Wage politics MW Yes Scope Include all workers or all workers in sectors Level playing field and labour peace in w/o collective bargaining industrial sectors Differentiation None or Geographical (cost of living) Basic rate – no more than on in any territory/region - with collective bargaining on top. Potentially excepting youth etc. Updating Decent income, inflation / cost of living Criteria Social partner Possible involvement Government Possible intervention www. inclusivegrowth. eu 10 Multiple rates, centrally or locally set. Sector or occupation or skill. Productivity, level of employment, enterprise wages Possible Strong Geneva, 8 July 2019

Coverage of the minimum wage MW: Is there a statutory minimum wage? (Yes / No) Coverage: Does the statutory MW exclude (groups of) dependent workers (like agriculture, tipped professions) that are not covered by another rate? • No • Yes, but only informal sector workers and/or workers in private households are excluded • Yes Differentiation: Does the statutory minimum wage consist of one or multiple wage rates (e. g. differentiated by age, geographical, sectoral). Can this be coded from the WI Minimum Wage Database? • Single rate for the entire country • Multiple, but no more than one rate per region • Multiple rates covering the same geographical territory www. inclusivegrowth. eu 11 Geneva, 8 July 2019

Updating of the Minimum Wage Level: at which level is the MW set? • Only at the national/federal level (N. B. refers to who sets the MW, could be multiple wage rates as long as set centrally) • At the national/federal level with higher rates set by subnational/local authorities • At the national/federal level with different rates (higher or lower) set by sub-national/local authorities • At the level of sub-national/local authorities Indexation: How is the updating of the minimum wage regulated? • By law, specified period. • By law, indexation • At discretion of government of the body setting the MW, regular updates • At discretion of government of the body setting the MW, rarely www. inclusivegrowth. eu 12 Geneva, 8 July 2019

Mapping consultation Actors Government, tripartite council, trade unions, employer organisations, experts Variables Brought the final level into effect Decided the final level unilaterally Variable follow up. Was this. . standard practice, as an unusual practice or not at all Decided the final level taking into account recommendations of other players or mechanisms (e. g. indexation) Was not involved at all in this respective year Source: EUROFOUND Eurowork database www. inclusivegrowth. eu 13 Geneva, 8 July 2019

Thank you for your attention Comments: J. Besamusca@uva. nl Co-ordinator Monique Ramioul In. GRID-2 Partners TÁRKI Social Research Institute Inc. (HU) Amsterdam Institute for Advanced Labour Studies – AIAS, University of Amsterdam (NL) Swedish Institute for Social Research - SOFI, Stockholm University (SE) Economic and Social Statistics Department, Trier University (DE) Centre for Demographic Studies – CED, University Autonoma of Barcelona (ES) Luxembourg Institute of Socio-Economic Research – LISER (LU) Herman Deleeck Centre for Social Policy – CSB, University of Antwerp (BE) Institute for Social and Economic Research - ISER, University of Essex (UK) German Institute for Economic Research – DIW (DE) Centre for Employment and Work Studies – CEET, National Conservatory of Arts and Crafts (FR) Centre for European Policy Studies – CEPS (BE) Department of Economics and Management, University of Pisa (IT) Department of Social Statistics and Demography – SOTON, University of Southampton (UK) Luxembourg Income Study – LIS, asbl (LU) School of Social Sciences, University of Manchester (UK) Central European Labour Studies Institute – CELSI (SK) Panteion University of Social and Political Sciences (GR) Central Institute for Labour Protection – CIOP, National Research Institute (PL) Integrating Research Infrastructure for European expertise on Inclusive Growth from data to policy Contract N° 730998 For further information about the In. GRID-2 project, please contact inclusive. growth@kuleuven. be www. inclusivegrowth. eu p/a HIVA – Research Institute for Work and Society Parkstraat 47 box 5300 3000 Leuven Belgium

Appendices www. inclusivegrowth. eu 15 Geneva, 8 July 2019

Available on AIAS website for download www. inclusivegrowth. eu www. inclusivegrowth. be 16 Geneva, 8 July 2019

New website & interface (sneak preview) • Users download the data • Or make and download tables/figures/bar charts using a selection of variables, countries and years • Country experts can enter data on the website backside www. inclusivegrowth. eu www. inclusivegrowth. be 17 Geneva, 8 July 2019

WWW. ICTWSS. ORG www. inclusivegrowth. eu www. inclusivegrowth. be 18 Geneva, 8 July 2019

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Questions about MW Fixing Machinery 1. Is there minimum wage? 2. Do all workers have the right to (the same) minimum wage? 3. Who sets the minimum wage level? 4. How is the minimum wage updated? www. inclusivegrowth. eu 20 Geneva, 8 July 2019