Global Minimum Wage

Please Help ZNet





Often regulated by national law and below what one might call a decent wage – 2/3 of the average wage – the concept of a minimum wage prohibits employers from hiring workers for less than a given hourly, daily or monthly minimum wage. More than 90% of all countries have some type of minimum wage legislation.

The USA’s Fair Labor Standards Act of 1938 established a uniform national minimum wage for non-farm and non-supervisory workers. Coverage was later extended to most of the labour force. Historically, in many countries, the first moves to legislate wages did not set minimum wages. Instead, these laws created arbitration boards and councils to resolve labour conflicts before strikes took place. Below are seven examples of how various localities legislate wages:

  1. in 1894, New Zealand established an arbitration board (Industrial Conciliation and Arbitration Act);
  2. in 1907, the Harvester decision (Australia) established a “living wage” for a man, his wife and two children to live in frugal comfort;
  3. in 1909, the Trade Boards Act was enacted in the UK establishing four such boards;
  4. in 1912, the state of Massachusetts (USA) set minimum wages for women and children;
  5. in the 1960s, minimum wage laws were introduced into Latin America as part of the Alliance for Progress; however, these minimum wages were, and are, low;
  6. in 2015, Germany introduced a minimum wage of €8.50 (by 2020 it was €10.45); and
  7. in 2020, minimum wages in EU member states ranged from €312 to €2,142 per month.

The last example on the list is that of the European Union, albeit on a rather wide span (€312 to €2,142), shows that minimum wage regulation can work beyond individual nations. By October 2020, the EU unveiled an even more ambitious plan. The EU seeks to introduce an EU-wide, unified and – in EU terms – an “adequate” minimum wage while others want to take this idea further by suggesting a global minimum hourly wage.

German sociologist and entrepreneur Peter Spiegel is fighting for a global minimum hourly wage of one dollar per hour. In doing so, Spiegel wants to eliminate extreme poverty. He also seeks to trigger what he calls an Eco-Social World Economic Miracle whereby bonded labour and global slavery end. 

While there are different approaches to calculate the magnitude of global slavery today, some suggest the number of slaves worldwide is well above 40 million. Even though these are estimates, the number of global slaves is genuinely alarming, and the United Nations’ mission ending extreme poverty globally by 2030 seems unachievable.

Today, around 700 million people live on less than $1.90 a day. Many cannot even meet their basic needs. With a global minimum hourly wage, it should be possible to end this degrading situation faster. Many believe the world cannot do it because we are trapped in capitalism’s logic of competition that enforces wage dumping and a downward spiral – the infamous race to the bottom with all its bitter consequences and human costs. There are simply no rules and/or laws to help people move out of the starvation wage trap in numerous countries. Many states who are supposed to be an active force for good remain absent or prefer the neoliberal ideology of deregulation which in reality is pro-business regulation. 

What is necessary today and what has to be implemented politically is far more than a symbolic announcement by well-meaning and by not so well-meaning politicians. The symbolic policy is no longer enough. Yet, there are promising approaches such as fair trade. One of the goals of fair trade has been a living wage. One may see these efforts and concepts based on consumer labels on products we buy in the Global North.

Movements like Fair Trade are hugely important in terms of raising awareness. Yet, they are light years away from the actual goal of a global minimum hourly wage. To achieve a global minimum hourly wage, we might need a rather systemic change. The biggest lever to improve wages in the Global South would be a global minimum wage of one dollar per hour. Those living in New York, Singapore, Tokyo, Paris, or Sydney, $1 per hour sounds insignificant. But for many of the world’s most impoverished workers, $1 per hour would mean a significant increase in living standards. For some, it would mean survival.

A global minimum hourly wage would be truly revolutionary. It would banish extreme poverty worldwide. Poverty would be ejected into world history, and this would take place in a very short period of time. The $1 per hour global minimum wage idea needs to be explained in detail. For example, a textile worker in Bangladesh who sews jeans in a local factory to be sold in high street fashion stores, in some of the cities named above, would earn about four times as much per month with the introduction of the global minimum hourly wage. 

Millions of people would have money to spend on better nutrition, education for their children, medical care and access to clean water and energy. Since the global minimum hourly wage cap would apply globally, there would be no distorting effects of the neoliberalism’s much-loved idée fixe of competition. A truly universal minimum wage of one dollar per hour might even trigger an economic and social miracle worldwide. Because higher incomes also mean higher demand, the money workers earn will flow directly back into the economic cycle. A global minimum hourly wage would further challenge the neoliberal hallucination of a trickle-down effect.

In the Bangladeshi example, there are already minimum wages in the textile sector. But these are wage limits that relate to monthly salaries. Workers then are forced to work 60 to 80 hours per week to make ends meet. To eliminate this structural shortcoming, a global minimum hourly wage makes a decisive difference in relation to wages paid. In addition, an hourly minimum wage would reduce the need for manufacturers to compel employees to work 60 or more hours per week. Having shorter work weeks would also improve the workforce’s motivation and ability and reduce industrial accidents as well as incentivise employers to hire more people. 

Going back to the jeans example, a global minimum hourly wage does affect the final sale price of the garment made in Bangladesh. According to Peter Spiegel’s calculations, a seamstress’s wage for a pair of jeans would rise from 0.15 to 0.45 dollars. As such, a pair of jeans would be around €0,30 or US$0.36 more expensive. Consumers would not notice a global minimum hourly wage.

At times, currency fluctuations, for example, can have a higher effect on the price of jeans imported from Bangladesh. So far, this sounds good in theory. But how can a global minimum hourly wage be enforced internationally? There are two ways of doing this. Firstly, a global minimum hourly wage can be enforced through supply chain contracts between local factories in the Global South and buyers in the Global North.

Secondly, the United Nations can define a global minimum hourly wage as a human right. The International Labour Organisation (ILO) will then check that the global minimum hourly wage is respected nationally through local laws. All of this is not utopian even at a time when multilateralism has been damaged by Trump and Brexit and by capitalism in crisis – capitalism nearly always is.

Yet there surely will be problems with the implantation of a global minimum hourly wage here and there. But a global minimum hourly wage remains achievable. Perhaps one of the first steps might rely on the European Union. With an EU-wide minimum hourly wage in place, the EU is in an excellent position to drive this realistic scenario. 

Today, there are already many EU regulations and requirements despite the myth of a neoliberal free market. Some market regulating requirements are based, for example, on the environmental and social standards such as SA 8000 (social accountability) and ISO 14001 (environment). Many of today’s standards and regulations are widely respected and applied by companies and corporations worldwide. These standards can be supplemented to include a global minimum hourly wage. This can be achieved by the EU setting a one dollar per hour minimum wage as the standard. Then, the EU would only allow products into its huge market that meets its standards and regulations as well as the global minimum hourly wage criterion. 

The EU plays a considerable role in the global economy – with a GDP of $18.292 trillion. Most, if not all, multi-national corporations could not afford to ignore the European market with its standards and regulations. Yet, at the EU level, the global minimum hourly wage project has not made rapid progress because such a project needs political allies. Spiegel setup of global minimum hourly wage initiative using a petition with over 50,000 signatures supporting the introduction of a global minimum hourly wage to Germany’s development minister. The minister gave his support suggesting further in in-depth studies on a global minimum hourly wage.

In 2016, the then EU Commission President, Jean Claude Juncker, had assured his support by saying, this will be on my desk. Yet, the problem may be that politicians, businesses, trade unions, and non-governmental organisations have not yet understood what a powerful tool the global minimum hourly wage is for solving global poverty problems. Additionally, there the moral argument – it is simply unacceptable that people should work for starvation wages.

Leave a comment