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What is the minimum wage?

We explain what the minimum wage is and the mechanisms to calculate it. In addition, a list of minimum wages of several countries.

  1. What is the minimum wage?

It is known as minimum wage, minimum remuneration or minimum salary to the minimum amount of money that a worker must collect monthly , as established in the laws in force in his country, calculated based on a relationship between amount of money and number of hours worked .

In theory, a minimum wage also corresponds to the minimum amount of money that a formal worker must receive monthly to cover his most fundamental common expenses, and provide his family with the minimum physical, social and cultural conditions indispensable for decent living.

The latter, however, may not be fulfilled in periods of crisis , since the minimum wage  is susceptible to inflation , devaluation and loss of purchasing power of the local currency. To compensate for this trend, a salary update is usually given at least once a year , which takes the minimum wage as the base reference amount for the increase.

The idea of ​​the minimum wage was the product of a long history of trade union struggle and of the working classes, and was first applied in Australia and New Zealand at the end of the 19th century, when the State passed the Employers and Employees Act. and Employers) in 1890.

Since then, the defense of the minimum wage and its periodic updating is part of the most usual purposes of the workers’ struggle, since it must allow them access to decent housing , a monthly basket of basic food products, access to urban transport and school supplies for your children.

This measure, together with the reduction of the working day to 8 hours maximum and 40 weeks maximum, are part of the benefits for the improvement of the standard of living of the working class of the world.

  1. How is the minimum wage set?

minimum salary
The State can set a minimum wage rate for the entire country.

The minimum wage is the result of calculations made by the State contemplating various factors and variables , often according to workers’ unions and other forms of professional tuition or organization.

In some countries there are agencies responsible for this, as is the case in Mexico, whose Labor Law establishes the existence of the National Minimum Wages Commission (Conasami); or that of Argentina, with its National Employment, Productivity and Minimum Vital and Mobile Salary Council (CNEPSMVM). This always depends on the legislation of each country. There are even countries that do not yet contemplate the figure of the minimum wage at all, although they are the least.

Similarly, there are four usual mechanisms, according to the International Labor Organization (ILO) through which a minimum wage can be set:

  • State or university . A rate set by the State for the minimum wages of the whole country, without distinction of productive area, as long as it concerns formal employment.
  • State multiple . Various rates stipulated by the State depending on the labor sector in question.
  • Universal collective . A universal rate for the entire country, but determined by collective bargaining of the labor sectors.
  • Multiple collective . Different rates depending on the labor sector, but determined by collective bargaining.

To determine the amount of the minimum wage, according to the ILO, two methods can be taken:

  • Evaluate the cost of living . It is calculated taking into account the cost of basic life goods and services that a worker should be able to cover in their home, always stipulating a “type” (average) family, and usually based on the cost of living in the city capital of the country
  • Take salary statistics . Collect information regarding the lowest salary within a stipulated range of remuneration, to find a minimum with respect to the average. This method seems simple, but does not take into account that labor sectors may have different social protection mechanisms.
  1. Current minimum wages in few countries

The following is a list of minimum wages in Latin America, calculated in US dollars (and local currency) for the beginning of 2018:

  • Colombia : USD 218 (857,308.93 COP)
  • Panama : 744 USD (744 PAB)
  • Costa Rica : 512 USD (288,386.69 CRC)
  • Argentina : USD 515.9 (ARS 9,500.00)
  • Cuba : 23 USD (23 CUC)
  • Chile : USD 456 (275,965.62 CLP)
  • Mexico : 139 USD (2,671.77 MXN)
  • Uruguay : USD 431 (12,344.99 UYU)
  • Ecuador : USD 391 (USD 391)
  • Brazil : 325 USD (1,049 BRL)
  • Dominican Republic : USD 288 (DOP 12,873)
  • Peru : 255 USD (850 PEN)
  • Venezuela : USD 1.72 black value / USD 32.83 official value (248,000 BSF)
  • El Salvador : USD 251 (USD 251)
  • Bolivia : USD 262 (1,805 BOB)
  • Nicaragua : 115 USD (7,133 NIO)
  • Honduras : 341 USD (7,760 HNL)
  • Paraguay : 340 USD (1,883,335.82 PYG)
  • Guatemala : 380 USD (2,893 GTQ)

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