ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Should We Abolish the Minimum Wage?

A Response

While heated debates persist in developed countries regarding the continuation of the minimum wage laws, they still remain popular around the world. Unemployment concerns around the minimum wage fade away when the monopsony nature of the labour market is taken into consideration. Given the distinct nature of workers earning minimum wages in low-income countries when compared to high-income ones, it remains significantly effective in tackling inequality in the former. The job polarisation because of the labour-replacing technologies of today underlines the importance of such a measure. Thus, there is still a need for minimum wage, more so for low-income countries.


Unless specified otherwise, the article uses the word “minimum wage” to mean statutory minimum wage set up by the government at the central level.

Amidst heated debates surrounding the minimum wage laws, they remain the most popular welfare tool globally. The monopsonistic character of the labour market calls for a revision of the unemployment concerns. People earning minimum wage in low-income countries are different from those in high-income ones. Given the job polari­sation because of the labour-replacing technologies of today, minimum wage policy is still relevant, more so for low-income countries.

The minimum wage law is becoming one of the most popular tools to address concerns regarding inequality and poverty. More than 100 countries have instituted some form of wage floor, and there is renewed impetus to adopt new minimum wage rates or strengthen the existing ones. From 2010 onwards, countries like Cabo Verde, Germany, Malaysia, Surinam, and Qatar have adopted a minimum wage system. In 2019, India made a national minimum wage universal, covering workers across all sectors through the Code on Wages, and a national minimum wage floor came into effect in South Africa. An estimated 19% of all wage earners globally are paid at or below the applicable minimum wage (ILO 2020). There has been a measurable positive impact of minimum wages on societal welfare, which is the reason behind increasing the implementation of minimum wage laws. Out of the cacophony of divergent views, I will argue that we still need the minimum wage.

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Updated On : 8th Jan, 2022
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