The minimum wage is minimal remuneration that a Employeur must allot to a Employé, for one hour of work (one speaks implicitly about time minimum wage).

In France, he is heard according to a rough remuneration, of which are deduced for the employee from the wage national insurance contributions, and whose cost for the employer is increased employers' national insurance contributions.

Abatements with the minimum wage are often possible in particular according to the age of the employees.

Goal

The minimum wage aims at guaranteeing a level of income to the Employé S and Ouvrier S. It as well maintains a “fair competition” between employees (in their participation in work) as enters employers (to avoid the “Social dumping”). It takes part in the social cohesion of a country and the redistribution of the incomes. If the principle of the minimum wage east admitted in the economic differences philosophies, they are often of strong dissensions as for the level to be granted to him;

For the Liberal , the minimum wage corresponds to a prohibition to work for the employees whose work is not worth this value, and is the primary source of unemployment in the developed countries. The liberals estimate that the cost of the smic (to be differentiated from the final income) must be fixed so as to obtain only a Chômage of transition. The liberals think that a cost of high minimum wage is an injustice which the unemployed undergo. They estimate that the wages defined freely in period of Plein-emploi correspond to the value of the work of the employees and that, if one wishes to obtain minimum wages (without unemployment) high, it is to best allow via a rebalancing of the taxes and loads towards easiest. They estimate that creates less injustices and exculsions that a high minimum wage. Unemployment must be frictional. Wages must be proportional to the productivity of the employee. He is also regarded a cost for the employers, and not as an income. The minimum wage is judged by the liberals (Put, Pigou…)like slowing down the recruitings.

For the Marxist S , the minimum wage limits the working Exploitation. Indeed, the minimum wage prevents the forces of the market from fixing the wages at their level of subsistence, i.e. a level which allows simply the reproduction of the labor force. In this direction, it blunts the working claims and gives them a less radical range. It delays the revolution and the collapse of the capitalist system while trying to give him " a face humain".

For the social democrat or socialist reformists, the minimum wage is an instrument of Social justice. It makes it possible to remunerate the employees the least qualified by a “right level” which ensures a correct subsistence. It makes it possible to rebalance the power struggle between Patronat and paid Syndicats in favor of the latter. It is an economic instrument of piloting of a country since it limits imbalances of the market.

In practice

The minimum wage, when it concerns a law as in France, is of law and order. It is essential on the minimum wages envisaged by the collective agreements when those envisage a lower time remuneration for the employees.

In certain countries like the Germany, the Finland or the Sweden, there does not exist interprofessional minimum wage. In this case, they are the minimum wages negotiated between Managements and labor on the levels of the professional branches which apply. There thus exists as many minimum wages than of professional branches, which gives a certain flexibility to the economy. When they are not extended by a ministerial decree, the industrywide agreements apply only in the companies members of a trade union having signed the agreement. At fault of the extension of the collective agreement this one obliges the owner only towards the employees trade unionist signatory. But the principle of the equal treatment leads indeed to a readjustment of the wages in the company signatory.

The minimum wage can be seen like a prohibition (prohibition to work with lower wages), with all the consequences of libertarian restrictions and Travail dissimulated.

In the world

The fixing of the minimal wages is a political act which can be arbitrary or fixed by rules (automatic indexing, for example).

17 of the 25 countries of the European Union have a legal minimum wage (i.e. imposed by the law), so that the idea of an installation of a European interprofessional minimum wage seems a priori realizable. The system could function as in the United States, where each State can fix a minimum wage higher than the federal minimum wage.

In the developed countries, the minimum wages (when they exist) can be defined:

The remainder of the European countries (Germany, Finland, Austria, Italy, Cyprus, Sweden, Swiss) does not have a minimum wage, or has only agreements of minimum wage by professional branches).

See also:

( source: Eurostat, 2007)

In France

See also: Guaranteed minimum wage

In France, the first minimum wage, SMIG, in 1950 by a law voted by the Parlement is created. Very weak at the beginning, this minimum wage is not indexed on inflation. It does not apply to the agricultural sector, and has a different level according to the French areas.

In 1968, it is replaced by the guaranteed minimum wage (SMIC). By national range, the SMIC increased more quickly than the average wages during the Années 1990 and 2000.

History and revalorization

  • In France, the minimum wage (SMIC) is revalorized every year at July 1st. It is currently of 8,44€ of the hour.
  • With the the United Kingdom, although having been created in 1999, the minimum wage grew very quickly to reach in 2004 an elevated level, among highest in the world. This level is relativized by a very high level also average wages and Cost of living in the United Kingdom. In addition, the existence of rebates of 15% for the young people from 18 to 22 years, and 40% for the minors of more than 16 years, limit the effects of a high minimum wage.
  • In Ireland , the minimum wage was introduced in 2000. With 8,30 € of the hour. It should pass to 8,65 € in July 2007.
  • With the the United States, the minimum wage exists since 1938. There exists a minimum wage at the federal level and minimum wages on the level of the States, which cannot go down in lower part from the federal level. In January 2007, the American senate voted a law making pass the minimum wage of 5,15 $US of the hour to 7,25 $US in two years. Each State, and even each city, can fix its own minimum wage. For example, Santa Fe, in California, has a minimum wage of 8,50 dollars the hour. In 2005, 18 American States decided to increase their minimum wage to face the fall of the purchasing power of the poorest workers. It is of 7,50 $US of the hour in the Massachusetts in 2007 (then 8 $US in 2008). In the State of Washington, the minimum wage is worth 7,35 dollars of the hour. The number of people paid with the minimum wage (primarily of the women employed) is in fall: between 1997 and 2004, it fell of 2,8 million in the United States to account for only 1,4% of the population paid working today.

Analyzes

Relationship to inflation

The wages are an important component on the one hand, incomes of the consumers; and in addition production costs of the companies.

For this reason, the minimum wage has an impact on the Inflation; when it increases by supporting a inflation by the costs (if the productivity gains of the employees remunerated by the minimum wage are lower than the aforementioned increase) or by supporting a demand-pull inflation (if production capacities are insufficiently elastic compared to the increase in the request generated by the rise of the minimum wage).

In the economic theory

The minimum wage is an important component of the job market because it prevents from fixing the wages in lower part of a certain threshold. For this reason, it has an impact on the level of employment, the standard of living, of formation of paid and the level of inflation.

Several models make it possible to explain the incidences of the introduction of a minimum wage in an economy. Although these theories seem to be contradicted, they can make it possible to better include/understand the interactions which justify the existence of a minimum wage.

Neo-classic analysis

The neo-classic analysis considers that the existence of a minimum wage prevents the adjustments with the fall of the wages which allow the labor markets to be adjusted by the prices in the event of exogenic shock. When these adjustments are not sufficiently possible, one sees appearing in an economy, a structural unemployment or traditional unemployment. Other brakes which the minimum wage exist to prevent these adjustments, like the presence of strong trade unions defending of the collective agreements, the existence of social laws protecting the employees, and the existence of monetary social securities (allowance unemployment, Revenu from inactivity,…)

The neo-classic analysis insists on the fact that the existence of a minimum wage prevents the companies from engaging employees whose productivity does not make it possible to cover the social contributions and the minimum wage.

In the Theory of the insiders-outsiders ( include-excluded ), the minimum wage is a means for the employees of protecting itself from the competition of the unemployed, by prohibiting the “division of the cake” of the wage bill in more, but smaller shares. The existence of a minimum wage would thus penalize the part of the population the least best formed, excluded from the job market by the prohibition of a weak remuneration of labor slightly qualified.

One can notice that the whole of the neoclassicists do not challenge in block the existence of a minimum wage, but rather its too high level which induces the mechanism presented previously.

Indeed, a minimum wage very low only incidence on the saving since the near total of the employees are, in fact more, did not pay little.

Liberal analysis

The liberal estimate that the minimum wage introduced of the disturbances on the job market, and that there exist other more effective means to ensure the redistribution of the incomes in the economy. The minimum wage would be the leading cause of the Chômage in the economies like the France.

Certain liberals preach the replacement of the minimum wage by a system of negative tax, distorsif, just.

For the liberals, the existence of a minimum wage may find it beneficial at least to encourage the part of the population the least qualified to work and not to be dependant on the Social security.

Economic Marxism

For the Marxist , the existence of a minimum wage, by improving the situation of the working class, tries to demobilize this one in the radicality of its claims. The minimum wage is only one attempt to push back at increasingly remote horizons, the revolution political and social, only really able in their eyes to found a social justice.

Vision néo-keynésienne

For the Néo-keynésien S, the analysis can be summarized as follows:
  • In period of Plein-emploi, the minimum wage is perhaps useless, but it is not harmful because it does not apply
  • In layoff raised, the minimum wage ensures a stable income, obliges the employers to seek other adjustments that the incomes (formation, investments…), but with price of surplus of unemployment
  • minimum wage appears as safety for employees more weak (even if protection mechanisms other than imposed by the law can be invented), it is a piloting of Economic policy and allows the left-wing political parties fidéliser or to mobilize an electorate.

Vision post-keynésienne

For the theorists of the endogenous Growth, to which the Post-keynésien S are close (there exist theorists of the endogenous growth in much of currents of the economic thinking, sometimes opposite currents), the existence of a minimum wage has a positive effect on the level of the use in incentive the employees to invest in the long run in their employment, the Entreprise S to support the profits of Productivité, and the State to form its population. The joint efforts of the companies, paid and the State support the long-term growth and thus the level of employment.

The post-keynésiens challenge the neo-classic analysis of the job market which sees in the wages only one cost for the companies.

Thus, the wages would also represent for the companies of the outlets (the company being able to produce only if somebody can consume the production, which requires that the population has some purchasing power).

For the Post-keynésien S, the wages are an element of motivation of the paid ones: the higher the wages are, the more the employee are productive and are invested in its work (one also finds this analysis at the néokeynésiens, it is the theory of the Salaire of efficiency). For the companies, the existence of a minimum wage thus makes it possible to limit the absenteeism, the rotation of paid and supports social peace. The wage increases minimum support consumption and thus the outlets for the companies (this effect being reduced because of increasing share of the Importation S in national consumption).

International competition

The generalization of the minimum wages through the developed countries was done after the Second world war at the same time as the development of the international exchanges. The increased universalization of the exchanges of goods at that time, allowed the economic takeoff of the countries of Asia, to start with that of the Japan, involving in its wake of many others (South Korea, China…) This economic takeoff increased international competition in the sectors strongly dependant on the labor, like the textile or electronics (sectors where many employment was destroyed in Europe and with the the United States.). It is a paradox because the universalization supported by the western world reveals to him at which point the social protection systems which it worked out are viable only in closed economy and to call in question in a mondialized open economy. This point is all the same to moderate insofar as the great economies such as the United States or the European Union are, overall, rather not very open on the world (Taux of opening ranging between 10 and 15%): logically, more one country is large, less it is open, because the exchanges are made above all inside even country (only China derogates from this principle).

When that one compares the minimum wages throughout the world, one is struck by their astonishing heterogeneity. But this strong dispersion (at least within the developed countries) is much weaker when one takes account of the purchasing power parities between the currencies in which the aforementioned minimum wages are expressed.

It should be noted that there exists already a world minimum wage but for only one profession, that of sailor. These wages, which are opposable in 48 countries in the world, are managed by the International organization of work (ILO) and are declined according to the national currencies by holding account purchasing power to them local.

Situation in the illegality

When the worker is in the illegality (case of the clandestine immigrants), it cannot work legally; it is difficult for him to refuse a remuneration lower than the minimum wage, while supposing even that it knows this regulation. Moreover, it can find this remuneration very advantageous according to the standards of its country of origin.

Some Economic sectors, in particular those with strong proportion of Labor slightly qualified (construction,…), are more particularly prone to slightly remunerated illegal work.

References

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