MINIMUM WAGE POLICIES TO SUPPORT
WOMEN AND THEIR FAMILIES IN 121 LOWAND MIDDLE-INCOME COUNTRIES
José M. Mendoza Rodríguez
Gabriella Kranz
Ilona Vincent
Amy Raub
Jody Heymann
Arijit Nandi
About the WORLD Policy Analysis Center
The goal of the WORLD Policy Analysis Center (WORLD) is to improve the quantity and
quality of comparative data available to policymakers, citizens, civil society, and researchers
around the world on policies affecting equity, development, human health, and well-being.
Under the leadership of Jody Heymann, WORLD is committed to making its broad, globally
comparative findings publicly accessible to inform and encourage improvements in legal and
policy frameworks worldwide, allow nations to learn from the approaches taken in other
countries, facilitate studies of the feasibility and effectiveness of laws and policies in critical
areas, and support global and local civil society in their efforts to hold decision-makers
accountable.
About MACHEquity
The overall objective of the Maternal and Child Health Equity (MACHEquity) research program
is to examine how social policies focused on reducing poverty, income, and gender inequality
have an impact on the burden of disease among children and women under the age of 50.
Supported by the Canadian Institutes of Health Research (CIHR/IRSC), MACHEquity brings
together an international group of researchers to work with unprecedented data on social
policies and household-level survey data. The program makes datasets available to coinvestigators and collaborators to facilitate empirical research and provides mentorship and
training to a new generation of investigators.
About This Report
It has been 20 years since the international community committed to advancing equality for
women around the world through the Beijing Declaration and Platform for Action in 1995. Using
our global datasets capturing the legal and policy contexts shaping gender rights worldwide, we
have created a series of policy briefs that highlight areas of progress and areas needing further
improvement in education, constitutional rights, work and family, and child marriage. In this
brief, we examine minimum wage policies among 121 low- and middle-income countries and
how these have changed from 1999 to 2013. Both WORLD and MACHEquity are committed to
making a lasting difference on the ground through interactions among researchers,
policymakers, and other stakeholders invested in translating evidence into practice.
© 2014 WORLD Policy Analysis Center, MACHEquity
All rights reserved.
WORLD Policy Analysis Center
UCLA Fielding School of Public Health
650 Charles E. Young Drive South, 16-059 CHS
Los Angeles, CA 90095-1772
worldpolicyforum.org
MACHEquity
McGill Institute for Health and Social Policy
1130 Av. Des Pins O.
Montreal, QC, Canada H3A 1A3
machequity.com
CONTENTS
Abstract ................................................................................................................................. 1
Background ........................................................................................................................... 2
Methods ................................................................................................................................. 3
Findings................................................................................................................................. 4
Advances and Remaining Challenges ................................................................................. 5
Feasibility and Policy Action ............................................................................................... 5
Maps ...................................................................................................................................... 9
Map 1: At what level are minimum wages set per day? ....................................................... 9
Map 2: How has the level of minimum wage changed from 1999 to 2013? .........................10
ABSTRACT
The global burden of poverty disproportionately impacts women. In the interest of addressing
this, the Beijing Declaration and Platform for Action called for nations to pursue economic
policies and strategies that alleviate poverty among women. Minimum wage policies have long
been recognized as a means to lift workers out of poverty, and have also been shown to
protect women’s incomes and close gender pay gaps. In the 20 years since the 1995
Beijing Declaration and Platform for Action, most low- and middle-income countries have
legislated or adopted minimum wage policies; 81% of the 118 low- and middle-income
countries with available data had a minimum wage policy in place with established minimum
wage levels.
However, even where they exist, minimum wage policies in many countries have yet to
guarantee minimum wage levels that can adequately protect working women and their families
from poverty and material deprivation. In 11% of the 92 countries with complete data, the
minimum wage level was not high enough to guarantee an income that is above the
international poverty line of US$2/day per individual, for a family consisting of one working
mother and one dependent child. Additionally, to protect earnings over time, minimum wage
policy must regularly adjust to changing price levels. In many countries this has not been the
case. Moreover, there clearly is room for greater growth in minimum wage as GDP growth in
many countries has outpaced minimum wage growth. Of the 80 countries with complete data
in 1999 and 2013, 55% report real minimum wage growth rates that have not kept up with real
GDP per capita growth rates. Eliminating poverty among women requires that nations establish
statutory minimum wage protections for all workers, extend and guarantee protection to smaller
and marginal sectors likely to be overrepresented by women, and ensure that these minimum
wage levels are sufficient to cover the cost of basic needs of women and their families.
1
BACKGROUND
In recognition of the gendered dimension of poverty, the 1995 Platform for Action that resulted
from the Fourth World Conference on Women in Beijing, China, called for an end to women’s
poverty burden by urging nations to “review, adopt and maintain macroeconomic policies and
development strategies that address the needs and efforts of women in poverty.”1 One way to
address these needs directly involves the adoption of minimum wage policies, which have long
been recognized as key tools for lifting vulnerable workers out of poverty. The 1928
International Labour Organization (ILO) Minimum Wage-Fixing Machinery Convention (No. 26)
has been ratified to date by 104 countries, reaching one of the highest rates of ratification
among ILO conventions.2 Subsequent conventions placed emphasis on the need for minimum
wage policies that provide adequate earnings to workers and their families in order to guarantee
that basic needs are met.3 These include the 1970 Minimum Wage Fixing Convention, the
Decent Work Agenda in the 2008 ILO Declaration on Social Justice for a Fair Globalization,4
and the 2009 Global Jobs Pact.
Establishing and enforcing minimum wage policies matters for women and their families.
Globally there are 900 million working-age adults who support their households on less
than US$2/day, 500 million of whom do so on less than US$1.25/day.5 The majority of
these individuals are women.6 Women are more likely than men to be employed in lowwage jobs or low-graded jobs.7 Moreover, many women are geographically or temporally
limited in their employment options due to caregiving obligations, having to work specific
hours to accommodate child-care needs, or having to take on work within a reasonable
distance from their home or children’s care. In advanced and emerging economies alike,
child-care responsibilities may affect timing of labor market entry for women or force career
interruptions, and can reduce access to training opportunities and networking, resulting in
lower bargaining power.8 All of these factors contribute to women accepting lower wages
than men.
Minimum wages have the potential to increase women’s incomes and close gender pay
gaps, with data from case studies in high- and middle-income countries showing robust
evidence in this regard.9 Minimum wage laws improve the relative pay of women since
women constitute a high proportion of individuals in the bottom of the income distribution.10
Rubery and Grimshaw argue that “minimum wages are needed to counter the impact of
family, welfare and labor market institutions on women’s employment position; that is,
[minimum wages] may help to create a more level playing field or fairer treatment.”11
Income provided through working wages accounts for the majority of household earnings;
therefore even a modest increase in minimum wages can improve the lives of millions of
children.12
Establishing a minimum wage may yield important macroeconomic benefits as well. Countries
with high levels of income inequality and low wages experience economic growth at a slower
pace, take longer to recover from fiscal crises, and are less likely to sustain growth over the
long term.13 This is expected to occur because lower wages across the board translate into
reduced total demand, thus constraining economic and structural change.14
2
Wages must be high enough for workers to support their families. Existing conventions on
minimum wages provide limited guidance as to what an adequate minimum wage level should
be, and associated recommendations to make levels appropriate to guarantee adequate living
standards are often non-specific.15 Over time, minimum wages must also keep up with the
increasing cost of living. While most workers will earn more than the minimum, it is undeniable
that raising the minimum wage will impact the welfare of the workforce in general.16
METHODS
To examine the evolution and current state of minimum wage policies in low- and middleincome countries (LMICs), the MACHEquity program designed a longitudinal database to collect
data on minimum wage policies over the 1999-2013 period. Data on minimum wage levels in
local currency units (LCU) and on the adoption of minimum wage policies was primarily
obtained from ILO’s Global Wage database and complemented with the annual Country Reports
on Human Rights Practices from the United States Department of State. When these sources
were insufficient to procure data for specific years or countries, MACHEquity reviewed three
additional sources: a) labor and/or wage legislation as collected through NATLEX, b) the ILO
TRAVAIL legal database and official ILO memoranda, and c) official government legislation,
country-specific government websites, announcements, and databases online.
In general terms, the coding process consisted of completing and expanding the minimum
wage time series data contained in the ILO Global Wage database by coding the alreadycaptured national, sectoral, occupational, or regional minimum wage data. In coding these
minimum wage systems, we aimed to capture a figure that would be most representative of the
minimum wage protections applicable to the broadest segment of the population at any given
time. Minimum wage levels apply to private sector employees in the vast majority of countries,
with the exception of socialist economies where the public sector has traditionally been one of
the largest employers. All minimum wage levels were coded as monthly rates, converting any
non-monthly rates into monthly ones following country-specific monthly wage formulae
established by the ILO. These coding guidelines were adopted with the objective of ensuring a
consistent and analyzable database of minimum wage levels.
To provide cross-country minimum wage comparisons and to estimate the growth of real
minimum wage levels over time, purchasing power parity (PPP) conversion factors and inflation
data from the World Bank were merged with the minimum wage database and utilized to create
appropriate variables for analysis.
We examine legal provisions as they set a foundation for citizens’ rights and are a first step
toward improving outcomes. Across countries, having laws on paper does make a difference in
practice. Laws lead to change by shaping public attitudes, encouraging government followthrough with regulation and implementation, and enabling court action for enforcement. Even
when local enforcement is inadequate, laws may still have an impact by shaping the terms of
3
political debate and providing levers for civil society advocates. Nonetheless, laws are only a
first step in this area. Enforcement is critical.
FINDINGS
In this section, we examine whether countries have adopted minimum wage policies that
contribute to achieving strategic objective A.1 of the Beijing Platform for Action,17 with a focus
on 121 LMICs surveyed by the Demographic and Health Surveys (DHS) and/or by UNICEF’s
Multiple Indicator Cluster Surveys (MICS) up to 2013. We analyze country-level data on
minimum wage policies to identify which countries have statutory minimum wages in place, the
levels at which these are set, and the rate of growth of real minimum wages in relation to the
rate of growth of real GDP per capita.
Most LMICs to date have legislated or adopted minimum wage policies that can help protect the
living standards of the working poor and other vulnerable populations. Among the 118 countries
with data available on minimum wages, 81% had a minimum wage policy in place with
established minimum wage levels during the 1999-2013 period. In addition, six percent of
countries adopted a minimum wage policy with a specified level (Bangladesh, Comoros,
Georgia, Guinea, Guyana, Macedonia, and Timor-Leste), while one country (Democratic
Republic of Congo) suspended it temporarily within the same time period. By 2013, 13% of
countries still did not have an official minimum wage level set. These included nine countries―
Cape Verde, Qatar, Sao Tome and Principe, Somalia, Suriname, the United Arab Emirates,
Central African Republic, Eritrea, and Namibia―that had no statutory minimum wage policy in
place, three countries that adopted legislation but had yet to set a minimum wage level (Egypt,
Maldives, and Yemen), and three countries that abolished it before 2013 (Burundi, Djibouti, and
Ethiopia) (see Map 1).
Even where they exist, minimum wage policies in many countries have yet to guarantee
minimum wage levels that can adequately protect working families from poverty and material
deprivation. Low minimum wage levels were most frequent in Sub-Saharan Africa. Of the 92
countries with complete PPP-adjusted minimum wage level data in 2013, the lowest monthly
minimum wage levels in PPP-adjusted U.S. dollars were reported in Uganda ($5.72), Sierra
Leone ($11.54), the Democratic Republic of Congo ($65.14), Malawi ($77.88), Liberia ($79.83),
and Guinea-Bissau ($94.99). These monthly rates are far below the level required to support a
family. Relatively low minimum wage levels were also observed in Central Asian countries, such
as Kyrgyzstan ($44.09), Uzbekistan ($126.21), and Tajikistan ($127.17). On the other hand,
monthly minimum wage levels were more favorable in the Latin American region, where
economic growth through labor productivity has been accompanied by wage increases,18
specifically in Costa Rica ($610.74), Guatemala ($638.58), Honduras ($643.11), Panama
($643.86), and Paraguay ($703.85). Middle Eastern countries, including Lebanon ($774.36),
Turkey ($930.16), and Oman ($1,678.71) were found to have relatively higher minimum wage
levels.
4
Setting a minimum wage is not enough to lift women and their families out of poverty if the wage
itself is unable to provide for families’ basic needs, which is still likely the case in a number of
countries. In 2013, minimum wages were below the PPP US$2/day poverty line in three
percent of the 92 countries with complete PPP-adjusted minimum wage level data―Uganda,
Sierra Leone, and Kyrgyzstan. More countries set minimum wages too low to support more
than one person. In 11% of countries, the minimum wage level in place was not enough to
guarantee an income that is even above the international poverty line of PPP US$2/day per
individual for a family consisting of one working mother and one dependent child. However,
some LMICs have legislated a minimum wage that allows workers to better care for their
families. Forty-five percent of countries reported a minimum wage of more than PPP US$10/day
in 2013 (see Map 1).
ADVANCES AND REMAINING CHALLENGES
Since 1999 (the first year for which consistent data are available), six percent of countries have
adopted minimum wages. Two of these countries passed legislation as late as 2012 (TimorLeste and Macedonia), while one did so in 2013 (Guinea). Brosnan warns, however, that
“introducing a minimum wage does not, in itself, ensure a fairer wage structure. [The minimum
wage] must be set at a level that ensures that no one is low paid, and it must be adjusted
regularly to take account of changing price levels and movements in other wages.”1 In the vast
majority of countries, nominal minimum wage levels have increased over time, with real
minimum wage levels increasing by more than 25% in 51% of the 80 countries with complete
real wage data in 1999 and 2013. However, in 18% of countries real wages grew by less than
25% over the 1999-2013 period, and in 31%, real growth was negative, meaning that
minimum wages did not keep up with inflation (see Map 2).
To effectively guarantee earnings protection over time, minimum wage policy should also adjust
minimum wage levels according to income changes brought about by productivity growth. In
spite of this, our data show that workers’ minimum established compensation has not kept up
with positive labor productivity growth in a number of countries. Of the 80 countries with nonmissing real wage data in 1999 and 2013, 55% report real minimum wage growth rates that are
below real GDP per capita growth rates as calculated between 1999 and 2013, with 31% of
countries reporting negative growth in the real minimum wage. Some countries are nevertheless
updating minimum wage levels at rates that keep up with or exceed productivity growth. In six
percent of countries―Laos, Tajikistan, Belarus, Armenia, and Azerbaijan―real GDP per capita
more than doubled over the 1999-2013 period, while real minimum wage growth exceeded real
GDP per capita growth (see Map 2). This suggests that minimum wage policies providing
increasing protection to the working poor can be compatible with long-term economic growth.
FEASIBILITY AND POLICY ACTION
Adopting and enforcing minimum wage protections for women and their families require national
commitment. Such commitment may be weakened by arguments linking minimum wage
5
protections to economic stagnation, job losses in specific sectors and industries, and increases
in lower-paid informal employment at the expense of formal employment. However, empirical
research analyzing the impact of minimum wages on unemployment does not generally support
these arguments.20 Moreover, the long-term benefits to income and gender equality need to be
weighed against the relatively small negative impact observed in limited settings on employment
outcomes.21 If designed to address the economic environment and the national social context,
minimum wages can bring about other desirable long-term effects, including the rebalancing of
the domestic economy, the strengthening of aggregate demand and consumption and, in turn,
the emergence of new investment opportunities and job creation.22
For minimum wages to be an effective tool against poverty, minimum wage levels need to keep
up with the cost of living. This is not always the case. In Mexico, for instance, minimum wage
policy has been strongly influenced by efforts to bring fiscal balance (minimum wage levels
determine a number of social security benefits). As a result, minimum wages have remained
low, lagging behind market levels, and thus offering limited protection to the poor. In contrast,
Brazil’s minimum wage policy has been crucial in maintaining and even fostering domestic
consumption over the past 20 years, through the linkage of minimum wage levels to inflation
and GDP growth, all the while providing for the basic needs of workers.23
It is important to understand that minimum wage policies may also have significant spillover
effects on non-targeted groups. One of the most salient criticisms to minimum wage adoption
lies on its "limited" reach to all employment sectors. It is argued that minimum wage policy
designed for the formal sector will be unable to protect the incomes of the working poor since
most of them are employed by the informal economy. This is especially relevant to women, who
constitute the majority of informal employment. However, research suggests that increases in
minimum wages are associated with increases in wages in the informal economy as well.24 In
what is known as the "lighthouse effect," formal sector minimum wages serve as a benchmark
for "fair remuneration" to the entire economy, including sectors that are not legally benefited by
it. This effect has been particularly important in Latin America, specifically in Brazil, Mexico,
Argentina, and Uruguay.25
Our findings and analyses on minimum wage policies in LMICs point to a number of promising
avenues for crafting minimum wage regimes that effectively protect the livelihoods of women
and the working poor. These avenues include but are not limited to the following: establishment
of statutory minimum wage protection for all workers, extending and guaranteeing protection to
smaller and marginal sectors likely to be overrepresented by women, introducing minimum
wage levels that are sufficient to cover the cost of satisfying the basic needs of women and their
families, the adoption of minimum wage updating mechanisms that protect workers and families
against the erosive effects of inflation over time, and the creation of parallel mechanisms of
minimum wage enforcement to increase the chances of policy applicability among
disenfranchised groups, women in particular. Support for the adoption of minimum wage
policies following these recommendations may involve a renewed consideration of such policies
as powerful macroeconomic strategies that can bring not only income protection to the poor, but
also stronger social stability through reduced income inequality, improved employment trends
6
within the formal and informal sectors, and enhanced chances of positive health and education
outcomes in the long term.
1
Beijing Declaration. (1995). "Platform for Action." Fourth World Conference on Women. Vol. 15. Strategic objective
A.1.
2
C026 - Minimum Wage-Fixing Machinery Convention, 1928 (No. 26) Convention concerning the Creation of
Minimum Wage-Fixing Machinery (Entry into force: 14 Jun 1930) Adoption: Geneva, 11st ILC session (16 Jun 1928) Status: Instrument with interim status (Technical Convention). Accessed on May 19, 2014 at
http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO:12100:P12100_INSTRUMENT_ID:312171:NO
3
International Labour Office & International Labour Conference. (2009). Recovering from the crisis: A global jobs
pact. Geneva: ILO;
Pember, RJ., Dupré, M-T. (01 June 1997). Statistical aspects of minimum wage determination. Article published
online and accessed at http://www.ilo.org/wcmsp5/groups/public/---dgreports/--stat/documents/publication/wcms_087898.pdf, Accessed on May 16, 2014.
4
International Labour Organization C131 - Minimum Wage Fixing Convention, 1970 (No. 131). Date of entry into
force: 29 Apr 1972, accessed May 20, 2014 at
http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_INSTRUMENT_ID:312276;
International Labour Organization. (2013). Global Wage Report 2012/13: Wages and equitable growth. Geneva: ILO
Publications.
5
UN System Task Team on the post-2015 agenda. (May 2012). Emerging development challenges for the post-2015
UN development agenda: Employment. Thematic Think Piece. ILO.
6
Women 2000, Gender Equality, Development and Peace for the Twenty-first Century. “The Feminization of
Poverty,” Fact Sheet no.1 accessed on May 20, 2014 at
http://www.un.org/womenwatch/daw/followup/session/presskit/fs1.htm.
7
Rubery, J. and Grimshaw, D. (July 2009). Gender and the minimum wage. Paper Prepared for the ILO Conference
‘Regulating for Decent Work’, Geneva. Accessed on May 22, 2014 at
http://www.ilo.org/legacy/english/protection/travail/pdf/rdwpaper33a.pdf.
8
International Labour Organization. (2012). Global employment trends for women 2012. Geneva: ILO: 36.
9
Robinson, H. (October 2005). Regional evidence on the effect of the national minimum wage on the gender pay
gap. Regional Studies [serial online];39(7): pp. 855-872. Available from: EconLit, Ipswich, MA. Accessed July 23,
2014;
Grimshaw, D. and Miozzo, M. (2003). Minimum wages and pay equity in Latin America. Geneva: International Labour
Office. Accessed on August 20, 2014 at: http://natlex.ilo.ch/wcmsp5/groups/public/---ed_norm/--declaration/documents/publication/wcms_decl_wp_14_en.pdf.
10
Jaumotte, F. (2003). Female labour force participation: Past trends and main determinants in OECD countries ECO/WKP(2003)30. Organisation for Economic Co-operation and Development (OECD).
11
Rubery, J. and Grimshaw, D. (2009). Gender and the minimum wage. Paper Prepared for the ILO Conference
‘Regulating for Decent Work’, Geneva. Accessed on May 22, 2014 at
http://www.ilo.org/legacy/english/protection/travail/pdf/rdwpaper33a.pdf.
12
Saget, C. (2001). Is the minimum wage an effective tool to promote decent work and reduce poverty? The
experience of developing countries. Geneva: ILO.
13
UN System Task Team on the post-2015 agenda. (May 2012). Addressing inequalities: The heart of the post-2015
agenda and the future we want for all: Thematic Think Piece. ECE, ESCAP, UNDESA, UNICEF, UNRISD, UN
Women. Accessed on May 16, 2014 at http://www.un.org/millenniumgoals/pdf/10_inequalities_20July.pdf;
Chaudhuri, S. and M. Ravallion, M., (2006). Partially awakened giants: Uneven growth in China and India. World
Bank Policy Research Working Paper, Number 4069, available at:
http://www.wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2006/11/17/000016406_2006111711;
Berg, A.G. and Ostry, J.D. (2011). “Inequality and unsustainable growth: Two sides of the same coin?” IMF Staff
Discussion Note; SDN/11/08, available at: http://www.imf.org/external/pubs/ft/sdn/2011/sdn1108.pdf.
14
UN System Task Team on the Post-2015 Agenda. (May 2012). Addressing inequalities: The heart of the post-2015
agenda and the future we want for all: Thematic Think Piece. ECE, ESCAP, UNDESA, UNICEF, UNRISD, UN
Women. Accessed on May 16, 2014 at http://www.un.org/millenniumgoals/pdf/10_inequalities_20July.pdf;
United Nations Research Institute for Social Development. (2010). Combating poverty and inequality: Structural
change, social policy and politics. Geneva, available at: http://www.unrisd.org/publications/cpi.
7
15
Brosnan, P. 'The minimum wage in a global context', in J. Michie (ed), (2011). The handbook of globalisation,
second edition. Cheltenham, Edward Elgar: 215-229 at p. 223.
16
Ibid, p.222
17
Beijing Declaration. (1995). Platform for Action. Fourth World Conference on Women. Vol. 15. Strategic objective
A.1.
18
International Labour Organization. (2013). Global Wage Report 2012/13: “Wages and equitable growth” ILO:
Geneva: p. 28.
19
Brosnan, P. The minimum wage in a global context, in J. Michie (ed), (2011). The handbook of globalisation,
second edition. Cheltenham, Edward Elgar: 215-229 at p.221.
20
Brosnan, P. The minimum wage in a global context, in J. Michie (ed), (2011). The handbook of globalisation,
second edition. Cheltenham, Edward Elgar: 215-229 at p.225;
International Bank for Reconstruction and Development, The World Bank. (2012). World development report 2013:
Jobs. Washington, DC: 261;
Betcherman, G. (March 2014). Labor market regulations: What do we know about their impacts in developing
countries? Policy Research Working Paper 6819, The World Bank. http://wwwwds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2014/03/27/000158349_20140327105437/Rendere
d/PDF/WPS6819.pdf.
21
Ibid;
Alatas, V. and Cameron, L.A. (2003). “The impact of minimum wages on employment in a low income country: An
evaluation using the difference-in-differences approach.” Policy Research Working Paper Series 2985, World Bank,
Washington, DC. http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-2985.
22
International Labour Office & International Institute for Labour Studies. (2013). World of work report 2013:
Repairing the economic and social fabric. Geneva: Chapter 3.
23
International Labour Organization. (2013). Global wage report 2012/13: Wages and equitable growth. Geneva: ILO
Publications.
24
International Labour Organization. (2009). Global wage report 2008/09: Minimum wages and collective bargaining,
towards policy coherence ILO: Geneva, p.45.
25
Maloney, W. and Mendez, J. (2004). Measuring the impact of minimum wages: Evidence from Latin America.
pp.109-130. http://www.nber.org/chapters/c10068.pdf.
8
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