In many industries around the world, technology has taken over manual labor. It implies that the need for workers and employees has reduced. Similarly, this change has occurred worldwide, with many companies mimicking the global trend. Despite that, many industries still rely on manual work. The significance of a skilled and experienced workforce in those industries is highly crucial.
Raising salaries and wages has been one of the most debated topics worldwide. Several factors contribute to how much wages in a country are. Usually, the government and its fiscal policies play a crucial role in setting a base for wages. Apart from that, market factors can also play a critical role in the process. Similarly, the salaries and wages from one industry differ from another.
On top of that, the government in a country can impose laws that control salaries and wages. Usually, it comes through the labor laws in that country. One of the crucial ways to achieve it is through minimum wage laws. However, some countries still haven’t imposed a minimum wage law. Economists believe there are various reasons a country should have laws for minimum wages.
Before discussing those reasons, it is crucial to understand labor laws and minimum wage. These topics can help clarify why countries must impose a minimum wage limit.
What are Labor Laws?
Labour laws refer to several regulations that apply to an employment relationship. Usually, it applies to two parties, the employee and the employer. The government is also a part of the labor laws. However, it is not an active participant in the relationship between those parties. Nonetheless, labor laws also apply within the government. Labour laws differ from one country to another based on needs.
Labour laws mediate the relationships between various entities. They cover workers, employers, trade unions, and the government itself. On top of that, labor laws also come as individual laws. These laws make up a part of the labor laws that apply in a country. Individual labor law covers an employee’s rights at work through the work contract. The government plays the primary role in setting labor laws.
Labour law includes legislation that specifies the rights and responsibilities in employment. Essentially, they cover these aspects for employers and employees. One of the primary purposes of labor laws is to protect employees from exploitative behavior. On top of that, these laws are also set to guide employers to treat their employees. Most governments include various individual labor laws within this legislation.
Overall, labor laws refer to the rules and regulations that dictate the employment relationship. These laws apply to employers and employees. However, they also cover trade unions and governments. Labour laws can impact how each party in this relationship acts and behaves. Primarily, these laws exist to protect employees and guide employers. Labour laws cover various areas in an employment contract.
What is the Minimum Wage?
Minimum wage refers to the lowest rate an employee must legally pay its employees. It applies to every employment contract. Essentially, it guides employers on how much they must pay their employers at minimum. If employers fail to meet this requirement, they face penalties and fines from the government. The minimum wage falls under the labor laws set by the government.
In most jurisdictions, a minimum wage refers to the lowest hourly rate for workers. It sets the floor limit for payments that employers make to employees. Most countries globally have adopted a minimum wage policy to protect employees. Despite that, many countries have failed to impose a minimum wage policy due to various reasons.
Apart from setting the minimum wage, governments also define the maximum hours worked per day. On top of that, they also specify other time intervals. By doing so, governments also control if workers can receive additional compensation for more hours worked. The minimum wage can cover various aspects of the employment relationship. However, both parties cannot control how much this wage will be.
The minimum wage also plays a similar role as labor laws. Additionally, it is a type of individual labor law set by the government. Its primary purpose is to protect employees from any exploitative behaviors from employers. On top of that, it guides employers on how much they must pay their workers. The minimum wage also plays a crucial role in stimulating the economy in multiple ways.
What are the reasons a country should have laws for Minimum Wage?
Undoubtedly, the minimum wage plays a crucial role in any economy. Many countries have already adopted a minimum wage policy in the past. However, most others have failed to set a minimum wage. Nonetheless, those nations are moving toward adopting a minimum wage policy soon. There are various reasons why a country should have laws for minimum wage.
Among those, the top five reasons a country should have laws for minimum wage include the following.
Protects workers from exploitation
One of the crucial reasons countries should adopt a minimum wage is to protect workers. Usually, nations with cheaper labor attract foreign investments. On top of that, these countries also receive outsourcing contracts. However, they also suffer from various exploitative behaviors from employers. Setting a minimum wage can help protect workers. Essentially, it ensures employees receive reasonable pay for the work.
Increases workforce motivation
If employees receive reasonable compensation, they feel motivated to work harder. Employees also experience a boost, mentally and physically. Many employers recognize this motivational boost and pay higher wages than the minimum wage. However, in many countries, that is not the case. For these nations, setting a minimum wage can benefit workforce motivation significantly. In its absence, they can suffer.
Improves the economy
Setting a high minimum wage stimulates the economy. Firstly, it increases consumer spending since it provides higher income to workers. Secondly, it raises the standard of living within that nation. In these ways, a minimum wage can improve the economy. This reason should be the only argument to introduce laws for minimum wage. Besides these, minimum wages can have other positive impacts on the economy.
Reduces wage difference and inequality
Without a minimum wage, an economy can suffer due to wage differences and inequality. The longer these issues prevail, the more harm they cause to the economy. Governments recognize these issues and introduce minimum wages to tackle them. Nonetheless, many countries have failed to set a minimum wage. For these countries, the minimum wage can play a significant role in resolving those issues promptly.
Reduces government spending on welfare
Some countries offer workers pay even when unemployed. On top of that, they also assist people when they need additional income. It places more load on the government and can impact taxes. However, setting a minimum wage can play a crucial role in reducing that spending and the burden. Workers are more likely to stay in their current jobs due to minimum wages. This way, it can reduce unemployment.
Most countries use labor laws to protect employees. On top of that, they dictate the relationship between various parties, including employers and employees. One of the individual labor laws these countries can impose is a minimum wage. However, some countries have failed to introduce this law. There are various reasons a country should have laws for minimum wage. Some of those are available above.