Is It Essential For A Country To Have A Minimum Wage

By Daniel Stephens,2014-06-27 10:16
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Is It Essential For A Country To Have A Minimum Wage

    Is It essential For A Country To Have A Minimum Wage?

    Is It Essential For A Country To Have A Minimum Wage?

    Minimum wage is the minimum amount of salaries that must be paid to

    the majority of the workers within a country; it is generally paid on hours, days or months. It is necessary and fair for society to fix the minimum wage rate, so as to cover the physical needs of poor workers and their families” (International

    labor office, 2006, line2-7). Since 2004, China (mainland) has enacted a law to on minimum wages. The Chinese government argues that the minimum wage can protect low income people and make sure that the economy can grow more fairly (Wikipedia, n.d). In fact, the number of countries which enact the minimum wage policies is increasing. However, there are some people criticize that the minimum wage will actually result some negative effects on society, such as the increase in the rate of unemployment (Anderton, 2009), they argued that the issues of minimum wage policies will do harmful to both society and economy. This essay will indicate that it is not essential for a country to operate policies of minimum wage, and the supporting reasons will be given.

    The supporters of the policies claim that the minimum wage rate

    represents the fundamental index of the lowest standard of living; it is seen as one of the horizontal equity. They argue that every worker ought to have fair rights to receive the same rewards in payment for the same working time (Anderton, 2008). As an advanced human society, everyone should be treated more fairly, although it is enjoying a rapid grow in productivity (Anderton, 2008).However, we believe that it is being impossible for an economy to enact a same minimum wage rate, because the equilibrium of wage rate in labor market depends on the demand and supply of workforce, according to some of the economists, any intervene into the economy is being inefficiency, which will lead to deadweight lose (Anderton, 2008). In addition, the minimum wage will create unemployment (Anderton, 2008). For example, Hong Kong is one of the



    Is It essential For A Country To Have A Minimum Wage?

    economies which do not have a minimum wage rate; its unemployment was 4.9 percent in the fourth season of 2009. This figure is lower than most economies where minimum wage policies are operated (China Daily, 2010). The reason that minimum wage policies will creates unemployment is that employers will prefer experienced and high educated workers rather than an unskilled worker with the same cost, therefore, those workers with less working experiences and young aged will have less chance to be employed (Tutor2u, n.d.). we believed that minimum wage could not protect those workers without

    skills and experiences, and the policies were not so fair to protect everyone While, those opponents of the abolition of the minimum wage also claim

    within the economy, also, it will lead to inefficiency. that minimum wage can encourage and motivate workers to be more

    productive. Although, workers and employees will work harder than before as long as the wages is increased (Tutor2u, n.d.), the cost of the business will be raised as well (Anderton, 2008). Also, the side effects, such as employees with competitive high salaries will ask to raise their wage rates, due to the increase of minimum wage rate, will impact on the profitability of the business, because, once all the salaries are improved by the same proportion, then, the price level of the economy will be increased, it is a risk of inflation, which will result poor people worse-off, although people earns more money, the price level of the economy is increased as well (Anderton, 2008). In the business operation, especially for small firms, the budget of cost are not so flexible, if there is too much change in minimum wage rate, then it will cause disorders in business. Also, it is argued that the increase in minimum wage rate will actually prevent the revolution of new advancing technologies, for example, if firms have to pay more money to their employees, there will be less funds available to be invested into R&D department or buying new machines. This will make business hard to be improved (Anderton, 2008). Though out the history, the same things had happened in the U.K. in the later of 18

    th century. For these



    Is It essential For A Country To Have A Minimum Wage?

    reasons, minimum wage policies will make the business development slowly.

    The supporters of minimum wage claim that minimum wage will be helpful to reduce the poverty. After the introduction of minimum wage, poor people will

    have more money to increase their standard of living (Anderton, 2008).

    However, the fact is on the opposite, minimum wage policies do not reduce

    poverty actually; the reason that the minimum wage policies can not fight

    poverty is that only few minimum wage workers are really poor. In fact, there

    are 73.4 percent of minimum-wage workers are young people whose age are

    ranging from16 and 24, and over 60 percent of minimum-wage workers work

    through part-time jobs (Sherk, 2007). And, most of the young workers can get

    some support from families. The properties of people who live under the

    absolutely poverty line is always being there and stable. Most unemployment

    people can go back to work within a short period of time, but the majority of

    unemployment is long term unemployment, but the minimum wage rate can

    not help them out of poor as they can not go back to work. The most important

    thing for government to reduce the absolute poverty is to encourage them go

    to work and provide job trainings to them, instead of minimum wage policies.

    In conclusion, the positive effects bought by the minimum wage policy are less significant than the negative effects. The supporters said the minimum

    wage can reduce poverty, encourage and motivate workers to work more

    productive, and bring horizontal equity to people. However, the minimum wage

    does not really reduce poverty. It will increase the cost of business, lead to In addition, the

    other side effects and create more unemployment as well.positive effect some people preached is far away from the truth. For these

    reasons, the minimum wage policies will be harmful to both society and

    economic. We recommend that government should spend more money on

    providing job training to save these unemployed people, once the unemployed

    people are available to go back to work by skills, the market will reward them




    Is It essential For A Country To Have A Minimum Wage? Bibliography

    International Labour Office (2006) [Online] Minimum Wages Policy, Available at,

     [Accessed on 10/05/2010]

    Anderton, A. (2008) labour market failure, London: Pearson Education

Wikipedia (n.d) [Online] Minimum wage law,

    Available at: [Accessed on 10/05/2010]

    China Daily (2010) [Online] Unemployment rate eases to 4.9%, Available at: [Accessed on 10/05/2010]

    Tutor2u (n.d.) [online] Arguments against the national minimum wage, Available at adainst.htm,

     [Accessed on 4 December 2009]

    Sherk,J. (2007) [Online] Raising the minimum wage will not reduce poverty, Available at: [Accessed on 10/05/2010]

Wikipedia (2009) [Online] Minimum Wage, Available at [Accessed on 4 December 2009]



Is It essential For A Country To Have A Minimum Wage?



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