for and against min wage

8/3/2019 For and Against Min Wage

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MINIMUM WAGE:FOR AND AGAINST

Nguyn Ngc Thy Phng, Kamilla Mukhametshina,Valentina Vasilkova, Sara MacKay LD11S1


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What is minimum wage?

A minimum wage is the lowest hourly, daily or monthlypayment that employers may legally pay to workers.Equivalently, it is the lowest wage at which workers

may sell their labour. Usually it is issued either by the State Government orthe Federal Government.

Also minimum wage is used as the basis for

calculating the salary scales of salary levelsand allowances made some other mode prescribedby law.


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Some facts about minimum wage Minimum wage was originated in the 1890s in New

Zealand and Australia, minimum wages spread to theUnited Kingdom in 1909 and to nearly one-third of U.S.states during the next two decades.

In 1938, the U.S. Congress passed a federal minimumwage law as part of the Fair Labor Standards Act. Since that time, minimum wages have been introduced in

some form or anotherin numerous other countries. 20 out of 27 EU member states have a general statutory minimum

wage laid down by the government, usually a say in the process bytrade unions and employers.

Seven EU member states have no national statutory minimumwage: Denmark, Sweden and Finland as well as Germany,Austria, Italy and Cyprus rely on collective agreements alone.


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Minimum wage? A-OK!


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Pros of minimum wage

Protecting low paid worker Reducing UnemploymentAdults keep job Reducing income gap Incentive to work- Stimulating the Economy.


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Pros of minimum wage continued

Less worker abuse Encouraging productivity Forced sharing of wealth; Minimizing exploitation.


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Minimum wage? NO WAY!


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Cons of minimum wage

Minimum wage:slows job growth and increases unemployment;does not ease poverty; leads to cost-push inflation;makes employment of young people almostimpossible;

decreases investments to employees; is applied inconsistently.


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Treatment of minimum wage

W1

W0

Q2 Q1 Q3

Minimum wage

Labour supply

Labour demand

Quantityof labour

(Q)

Wagerate(W)


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Case study: Minimum wage A-Ok!

States with Minimum Wages above the

Federal Level have had Faster Small

Business and Retail Job Growth

Fiscal Policy Institute

www.fiscalpolicy.org

March 30, 2006


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Case study conductedin the United Satesbetween 1997 and2005

Compared economicactivity of small retailshops (less than 50employees) in states

that paid nationalminimum wage$5.15/hour and statesthat paid more thanminimum wage

States with the higherminimum wage grew 5.4%from 1998 to 2003 vs. 4.2%

Higher minimum wagestates had high job growthat (6.7% vs. 5.3%)

Higher minimum wage

states had higher payrollgrowth rate(24.5% vs.21.2%)

CASE STUDY


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More retail jobs for higher minimumwage states


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Case study: Why did this happen?

small businesses may have benefited fromsome combination of higher productivitythrough improved worker retention and savings

on recruitment and training. if you pay workers more, they can buy more,

boosting the overall economy, especiallyamong small retail businesses.


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CASE STUDY ON ESTABLISHING A

MINIMUM WAGE IN HONG KONG

(1932-2011)

FForora minimum wage : AgainstAgainst a minimum wage:

Minimum Wage Legislation

The Minimum Wage Ordinance,1932

it has never been put to actual use. Trade Boards Ordinance, 1940

it has never been applied.

In sum, till 2011, there has beenno provision for a economy-widestatutory minimum wage in HongKong


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Arguments of Hong Kong Special

Administrative Region Government

against min wageWages should be determined by the free market. The imposition of a minimum wage may cause higher

unemployment.A minimum wage system is an ineffective tool to alleviate the

problem of poverty. The imposition of a minimum wage system may be harmful to

the economic recovery and competitiveness of Hong Kong.A minimum wage system will increase production costs,

especially in labour-intensive businesses. This may discourageoverseas investments in Hong Kong.


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Hong Kong Sets Minimum Wage,2011.The Minimum Wage Ordinance was passed on 17 July

2010 and will came into force on this year's Labour Dayholiday, 1 May 2011.

The new law will benefit 270,000 low-paid workers.The initial SMW rate is HK$28 per hour and such rate is

subject to review every 2 years.For business groups, the decision

will raise costs. Critics add that the law

will undermine the traditional free market spirit.For failure to pay the SMW, the penalty isa maximum fine of HK$350,000

and imprisonment for 3 years.

Protestors demanding a minimum wage of HK$33 per hour


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Conclusion The employment consequences of a minimum wageare by no means certain. Much depends on theelasticity of demand for labour and the extent to whichfirms can offset the impact of the minimum wage byincreasing gains in labour productivity and achievingother cost savings.

But minimum wage always has positive and negative

effects. And necessity of setting of minimum wagedepends only on political, economical and socialconditions in the country.


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THANK YOU FOR YOUR KIND

ATTENTION!

for and against min wage

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