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Highlight: Ankara workshop puts minimum wage on the G-20 radar

April 14, 2016

A recent JustJobs Network workshop, held before the meetings of G-20 labour and finance ministers in Ankara, focused on policy responses to curb inequality among G-20 countries. One response is a proper minimum wage strategy. The absence of this type of strategy is bad for workers and businesses: either wages are set too low, stunting domestic demand, or they are set too high, leading to unsustainable labour costs and potential job losses.

IDRC-funded research on Brazil, China, and South Africa shows that rapidly increasing minimum wages have had positive effects in reducing overall inequality. China introduced minimum wages in 1994, benefiting an economy in long-term transition. Brazil’s minimum wage generated more formal jobs due to strong compliance and minimum wages that were quite close to the average wage. On the other hand, South Africa argues for the need of greater compliance.

In all three cases, setting a minimum wage has also had negative effects. For example, it has reduced jobs for youth and women in certain sectors, including in agriculture in South Africa. Minimum wages have limitations when serving as a social policy tool, as shown by IDRC-funded research in other middle-income settings (Central America and Argentina). In the long run, greater productivity will allow countries to support higher minimum wages.

The workshop served as a launch of the annual report Global Wage Debates: Politics or Economics? edited by Gregory Randolph (JustJobs Network) and Knut Panknin (Friedrich Ebert Stiftung). The report includes two chapters based on IDRC-funded research on the minimum wage in China from Beijing Normal University and Brazilian wage inequality from the University of Sao Paulo.

Browse Global Wage Debates: Politics or Economics? Read IDRC-funded research on the Impact of Minimum Wage Policy in China and in Brazil

Check out the press coverage of the event by Turkish media