Minimum wage laws are legislation that a country sets to protect its citizens against probable exploitation by employers through fixing the lowest allowed remuneration that employees can earn. This kind of legislation is adhered to by most countries and it helps to provide security for employees against possible exploitations when it comes to salaries.
At the same time there countries that only applied these laws to cover children and women, but the famous Great Depression pushed most of these countries to extend it to cover the general workers. Nonetheless, these rules and regulations were not applied to all industries but merely a selected few. For example, France as a country allowed the already existing labor laws to be used. In the United States on its part, specific labor regulations were looked at as being against the constitution.
Generally, the move to set legislation on wages never started by setting the minimum remunerations allowed for workers. It gave room for stakeholders to set up boards and councils that could help resolve possible disputes in relation to labor. In case of labor conflicts, these councils and boards would help to arbitrate so as to curb possible resolves to strikes.
There are benefits to the labor law that seeks to set minimum wages that can be paid to workers. It helps to close the gap that would allow for exploitation by some employers on their workers. Where there are rules and regulations to be adhered to, possible abuses can be prosecuted within the law and compensation to the exploited workers can be made.
The other advantage is increased living standards due to rise in income after the minimum earning is raised. When a country has not put measures to protect its citizens against bosses who demand a lot but pay less, people with lowest income will remain poor. However, once the lowest possible pay is raised people will have improved living standards.
Enforcing minimum wage bill as a country may have a number of drawbacks as well. For instance, most companies will want to outsource workers from less paying countries if the salary threshold set is beyond their budgets. Some companies will also regulate their job groups to make sure that the highest paid is not pocketing much, to the detrimental of employees.
Increasing the threshold on remuneration can also have side effects on the workers living standards. This is because once the threshold is raised; the cost of production will be high and even commodities become expensive for the citizens. It is common that people will want more in all sectors. Taxes too will basically go up and lowest paid workers remain in the poverty bracket.
The other problem with setting minimum wage laws is in relation to rise in unemployment rate. Companies will fail to hire more workers because they may not be in a position to afford them. This means that people seeking new jobs will not find it. At the same time, some companies will probably retrench workers when they reach a point where they are not making profits. Reducing the number of employees may balance income expenditure ratio.
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Benefits And Drawbacks Of The Minimum Wage Laws
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