Chapter 3: Who should set minimum wages

3.3 Statutory minimum wages

As is generally the case in the economic literature, the term statutory minimum wage is used here to designate all minimum wage fixing mechanisms other than through collective agreements. This may include minimum wages set through the decision of a competent authority; decisions of wage boards or councils; or industrial or labour courts or tribunals. This differs from the more narrow legal definition of the term “statutory” that refers to a legislative process.

In statutory systems, the most frequent way of ensuring consultation and participation of social partners and independent experts is through institutions such as tripartite or bi-partite wage commissions, wage boards, or other bodies with general competence for economic and social affairs.

However other forms of consultations are possible, including written communications or separate ad hoc bilateral consultations. Although most wage commissions are consultative, some countries have delegated decision-making authority to them, such as in the Republic of Korea.

As a matter of principle, social partners should be involved on a basis of equality. Membership in wage boards or commissions should include employers’ and workers’ representative organizations. The Minimum Wage Fixing Machinery Recommendation, 1928 (No. 30), and Minimum Wage Fixing Machinery (Agriculture) Recommendation, 1951 (No. 89), explicitly indicate that employers’ and workers’ organizations should be invited to recommend individuals for appointment to such bodies, to ensure that these individuals have the confidence of those whose interests they represent.

When wage boards are sectoral, it is essential that the relevant employers’ and workers’ organizations be involved. Women should also be included among social partners.

Here are examples of how the minimum wage is set in practice: