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Minimum wage Tuesday, 30 March, 1999, 17:46 GMT 18:46 UK
The international approach
minimum wage
As Britain wonders about the effects of its first national minimum wage BBC News Online glances further afield to those other countries where a minimum wage has been in place several years.

Minimum wage
Thousands of workers across Britain are looking forward to the introduction of the new national minimum wage next month; many employers are nervous.

The minimum wage has been set at 3.60 an hour for most workers, 3.30 an hour for trainees over the age of 22 and 3 for 18- to 21-year-olds, rising to 3.20 next year.

Nearly two million employees can expect to see their income rise and many more will be guaranteed a secure level of income. But some bosses fear it will raise costs intolerably.

To see how the new legislation might change the world of work, it is possible to look at the experience of other countries where a minimum wage is already in operation.

Most other industrial countries do have a minimum wage - but the level varies considerably. And many countries exempt some groups of young people.

In the past, European countries have tended to have the highest minimum wages, and some analysts believe this is linked to higher unemployment - especially among young people.

France has often been cited as an example of a country where high wages - and a cut in the working week - are pricing workers out of jobs.

On the other hand, the USA has created more than 20 million jobs in the last decade despite having a minimum wage similar to the new UK level. The US has the oldest national minimum wage system in the industrialised world, dating back to 1938.

Middle-ranking

The minimum wage was controversial even while it was still an election pledge in Labour's manifesto.

US car factory
US workers have had a minimum wage since 1938
In July 1997, ministers set up the Low Pay Commission, an independent body, to consider the impact a minimum wage would have and to recommend a level.

Members of the commission looked at national minimum wage systems in 11 other countries.

Their figures show that Australian workers - who earn at least the equivalent of 4.77 an hour - must be enjoying lives of comparative luxury. But the Portugese - on a minimum of only 1.65 - have a long way to go to match other industrialised nations.

The new UK level will fall in about the middle of these rankings, with six countries setting higher floors and five lower.

JobCentre
Analysts suggest a minimum wage puts people out of work
In its report, the commission found that a minimum wage may, as many feared, price low-productivity workers out of jobs, hitting young people particularly .

So it says there is a case for differentiating the minimum level by age.

The UK and Greece will be the only countries with a minimum wage which exclude under-18s.

Members of the commission also found that other countries use a range of methods other than the minimum wage to bolster the demand for low-skilled workers and/or their earnings.

See also:

28 May 98 | UK
11 Jun 98 | Economy Reports
19 Jun 98 | UK Politics
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