Whether you’re working within your country or planning to migrate abroad for job and stay, it’s important to know the minimum wage rate. That’s because it’s illegal for an employer to pay below the minimum wage.
And laws do not permit workers to accept pay below the minimum wage since it can lead to a lot of economic and social problems, among others. Just in case you’re unaware, a worker has to report to concerned authorities. If not, you’re also guilty of violating labor and other laws.
There’re several factors that decide the minimum wage in a country. Therefore, let’s start by understanding the definition of the term minimum wage.
Understanding Minimum Wage
The International Labor Organization (ILO), an organization of the United Nations, defines minimum wage. This definition is binding on all member and signatory states of ILO.
The ILO definition clearly says: “Minimum wages have been defined as the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract.”
Over 90 countries accept and implement this minimum wage definition of ILO. Some countries pay excellent, high minimum wage and hence, don’t implement the ILO definition. Others are economically fragile, poorest countries that have very few industries and job opportunities and hence, cannot implement a minimum wage standard of ILO.
Variations in Minimum Wage
The ILO standard of minimum wage also has variations. These can be decided by individual countries. Broadly speaking, minimum wages are also decided on basis of job risks and hazards, perks and other benefits and workhours per week.
It also takes into account relocation, climatic conditions, cost of living, job security, medical benefits and other parameters.
Usually, most employers will pay at least the minimum wage or slightly more. The most important point to remember is that employers cannot pay lower than the minimum wage, unless there’re wage deductions for reasons allowed under law.
Countries with Highest Minimum Wage
Given the above facts, let’s look at the countries with the highest minimum wage in the world. However, it’s worth remembering that lots of factors go into calculation of the minimum wage such as cost of living. Hence, if you’re signing-up for a minimum wage job, consider your lifestyle before accepting it.
The following figures for minimum wages are taken from Organization of Economic Cooperation & Development, ILO and other sources.
The figures I’m mentioning are from 2018. ILO, OECD and other organizations are yet to release minimum wage details for 2019 since they’re under compilation and could face delays due to the Covid-19 pandemic rattling the world since early 2020.
At US$12.10 per hour, OECD ranks Australia as the country with highest minimum wage for workers. The $12.10 indicates the actual take-home amount and not gross income before taxation. All employers in Australia have to pay this minimum wages under law or face legal action.
Offshore banking haven and a major financial center of the world, the princely state Luxembourg ranks second on the list of countries that pay the highest minimum wage. A worker in Luxembourg can expect at least $11.80 per hour.
Despite slower GDP and economic growth due to problems facing the European Union, the minimum wage in France stands at $11.50 per hour. However, this figure shouldn’t come as surprise since cost of living in France, especially urban centers of the country, are exceptionally high.
Although the economic powerhouse of European Union, the minimum wage in Germany stands at $10.90 per hour. This doesn’t mean that Germans are stingy paymasters. This minimum wage is adequate for any worker in Germany to lead a decent life because the state provides a lot of benefits free for its citizens.
Ranking at No-5 for the highest minimum wages in the world is the Kingdom of Belgium, one of the three Benelux states of Europe. Belgian employer pay minimum wage of $10.40 per hour.
This is a very reasonable sum considering that cost of living in Belgium is relatively lower than several other European Union member states.
6. The Netherlands
Also with $10.40 per hour, Netherlands, also one of the three Benelux states of Europe comes at No-6 on our list of countries that pay highest minimum wage.
Though Belgium and the Netherlands have equal minimum wage, there’s a slight difference in their rankings. This is because cost of living in the Netherlands tends to be a bit higher.
7. New Zealand
A self-sustaining economy and top destination for highly skilled migrants, New Zealand sets a minimum wage of $10.10 per hour. However, the country merits a slightly better ranking. That’s because taxation levels and cost of living in New Zealand is relatively lower than European states.
8. United Kingdom
Despite the hiccups of Brexit and economic problems in recent past, UK makes it to No-8 in the list of top 10 countries that pay the highest minimum wages. Converted to US Dollars, a worker in UK can expect $9.60 as the minimum wage per hour.
This rate is somewhat stable over the last couple of years since UK has a strong economy and could survive Brexit related problems. Cost of living in UK is however much higher than certain other European Union member states.
Though considered a weakling in the European Union due to a smaller economy, Ireland’s minimum wages are at par with those in UK, at $9.60 per hour. That’s because of certain similarities between labor laws of UK and Ireland.
The figure is expected to rise as the Irish economy shows excellent signs of a boom in 2020s and may emerge at the top in European Union.
Canada has ousted many countries to gain its rank at No-10 in the list of top 10 countries with highest minimum wages in the world.
The Canadian government sets minimum wage in the country at $9.50, which is fairly higher when compared over its neighbor- USA- which is the largest economy of the world. With large influx of migrants and their investments, Canada is becoming an economic powerhouse in North America.
Other High Minimum Wage Countries.
You might wonder why USA, the strongest economy in the world doesn’t rank in the list of countries with highest minimum wage. That’s because cost of living in USA is lower than the above countries. Hence, the American wage standard differs vastly.
At the same time, Scandinavian countries including Norway, Denmark, Sweden, Finland and Iceland have very high minimum wages compared to the list above. The same holds true for two more European countries, Austria and Switzerland.
Though minimum wages in the five Scandinavian countries, Austria and Switzerland are much higher than those in the list of top 10, they’re not taken into consideration worldwide.
That’s because these countries do not have a minimum wage law that complies with ILO and OECD standards. Hence, there’s no fixed minimum wage, unlike the top 10 countries.
Poorest Payers of Minimum Wage
As we can see, the top 10 countries where minimum wage are highest in the world are in the developing or developed nations list, there’s some countries where minimum wage is dismally low.
However, they do have well-defined labor laws that state the minimum wage. And there’re penalties for employers and workers that flout the minimum wage laws too, in some of these countries.
Once an economic giant of South America, wealthy oil exporter and now mired in political strife, Venezuela has the lowest minimum wage anywhere in the world at $43.62 per year.
These minimum wages are barely useful: the amount is grossly insufficient to buy a single decent meal for an entire family of four, due to hyperinflation. Venezuelans get some food allowance and other benefits which are grossly insufficient to provide a decent life, forcing many to migrate to nearby countries on foot.
Economy of Georgia is doing remarkably well over the past few years. This small Eurasian country saw immense hardships and economic problems after the 1991 break-up of the Soviet Union and formation of the Commonwealth of Independent States (CIS).
Tourism, manufacture and agro exports are seeing this country’s economy boom. However, its minimum wage stands at just $120 per year.
The island state, Cuba in the Caribbean Sea has the third lowest minimum wage in the world. On average, a Cuban can expect minimum wage of only $147 per month.
That’s because the socialist country faces economic isolation from most countries of the world and doesn’t have any significant trade and industries. However, Cuba can expect minimum wages to rise from 2020 as the country opens to global trade and improves bilateral relations worldwide.
Another part of erstwhile Soviet Union and CIS member, Kyrgyzstan is slowly recovering from economic downturns. With no significant industry and heavy reliance on exports from Russia and Asian countries, Kyrgyzstan has one of the lowest minimum wages in Central Asia.
Workers can expect minimum $199 per year only. Though some countries are helping Kyrgyzstan develop infrastructure, sparse population and difficult terrain make it difficult for an industrial boost.
Despite decades of independence, the former British colony Tanganyika has been unable to make any significant economic gains. Tanzania, as the country is now know, remains one of the poorest places in Africa.
Its main industry is seasonal tourism to Mt. Kilimanjaro and wildlife safaris. A bit of spice exports from Zanzibar are also insignificant though Tanzania formally gained control of this once independent spice island.
Bangladesh is now a major garments exporter of the world. In fact, Bangladesh is often referred by news channels as the clothier of the world due to its vast textile and readymade garments industry.
In recent years, Bangladesh is also emerging as a preferred back-office destination due to the large millennial generation.
Unfortunately, frequent natural calamities and political strife make it one of the poorer countries of the world, where minimum annual wage stands at only $224 per year.
Once a country that nobody knew existed on this planet, Malawi is now rapidly emerging as a growing African economy. Over the years, investors from various countries are opening up industries and developing infrastructure in Malawi.
Though minimum annual wages in Malawi stand at $294, the amount isn’t all that bad considering the lower cost of living in this country.
8. DR Congo
Democratic Republic of Congo is a classic example of how a pandemic or deadly virus can ruin a country. DR Congo is unfortunately referred to as Home of Ebola, the single most dreaded virus that causes intense illness and rapid death.
There’re no known cures for Ebola. Hence, few are willing to invest money in DR Congo and help the country emerge from its poor financial situation. Despite, foreign aid to help the Congolese people and tough working conditions ensure that minimum wages in DR Congo stand at $298 per year.
9. The Gambia
With 70 percent of The Gambia’s workforce working in agriculture, there’s not much they can make. Agriculture accounts for over 30 percent of The Gambia’s Gross Domestic Product and is the main driver of its economy.
There’re few industries in The Gambia and almost none of any international significance. However, working on farms, livestock breeding, forest produce and small industries help Gambians earn a minimum wage of $317 per year.
Just in case you didn’t know, most African slaves in America came from Liberia. In fact, the country gets its name from the English word Liberty since it became home to lots of liberated slaves following the American civil war.
Liberia has always had a turbulent political history. Though rich in natural resources, frequent political unrests make it one of the poorer African nations. Minimum salaries in Liberia stand at $332 per year.
Before concluding, I’ll point out that often minimum wages are only indicative and exist on paper. Employers in some countries openly flout minimum wage requirements. And workers bear the injustice because of lopsided laws and high cost of waging a legal battle against the employer for minimum wages.