Brazil
The current Brazilian national minimum wage programme was implemented in 1988 with the aim of providing a subsistence income for workers as well as their families. The national minimum wage is determined at least once a year by the federal government. The adjustment of the minimum wage is determined by the executive, and is based on economic datasets, including the previous year’s inflation rate, the two previous years’ GDP data, as well as social factors. Since the 1990’s the national minimum wage has been increased at a rate higher than inflation, however, recent fiscal constraints on the Brazilian economy have seen increases fall closer in line with inflation.
There is strong sentiment from COSATU that the Brazilian case study be used as a model to be emulated by South Africa in the creation of its own national minimum wage. Coleman has stated that while Brazil faces many of the same socio-economic issues as South Africa, such as high unemployment, high income inequality, and high poverty levels, it continues to make strides in reducing these issues through the use of an aggressive national minimum wage, giving rise to what he has termed as the “Brazilian Miracle.” It has been acknowledged that the Brazilian application of the system has resulted on poverty-reduction as well as economic growth. However, the model was applied during a time of already strong economic growth, which supported the higher minimum wages and resisted the job destruction and inflation fears generally associated with minimum wages. Seekling and Nattrass (2015) argue that South Africa currently find themselves in entirely different economic conditions as compared to those which Brazil found itself at the implementation of its current system. As such, it is argued that the economy in this climate would be unable to support higher minimum wages in the same way. The authors are further critical of Coleman’s approach to the Brazil-South Africa comparisons. They highlight issues ignored by Coleman, such as a difference in purchasing power parity. Kanbur points out that Brazil’s prudent fiscal policy and general macroeconomic stability contrasts with the current situation in South Africa. Further, he notes that inequality in Brazil was simultaneously addressed through a large redress of the education sector, albeit with a decade long time-lag. Such an aggressive stance to setting the minimum wage in the face of a cycle of poor economic growth, a lack of a coordinated macro approach, the political and economic undesirability of any short-term job losses, and the current pressure on the fiscal position of the government, which would feed inflation concerns, it would be inadvisable to pursue an aggressive national minimum wage rate, as done by Brazil. France France implements a strong national minimum wage system, which adjusts automatically to economic growth. Termed the SMIC (Salaire Minimum Interprofessionnel de Croissance) system and implemented in its current form in 1970, this “guaranteed interprofessional national minimum wage” is adjusted annually depending on inflation, measured with a form of an adjusted Consumer Price Index, as well as purchasing power changes, social factors, and macroeconomic factors like employment levels and productivity. SMIC represents the trend in most of Europe to adopt a “living wage” approach to minimum wages, which not only acts as a guaranteed minimum income which seeks to cover basic household expenses, as with previous systems, but also seeks to narrow the wage gap and distribute economic growth more evenly. Continued meaningful participation in the economy is guaranteed by the requirement that the real minimum wage can increase annually by no less than half of the real wage growth in the economy. Further, between annual adjustments, if the inflation rate breaches a 2% ceiling year-on-year, minimum wages …show more content…
While India utilises a national wage floor, it is set extremely low. Practically, individual sectors’ minimum wages are set independently in respective geographical areas, resulting in a minimum wage structure that is highly sectorally and geographically fragmented. Each sector in each geographical area has its own council, comprising representatives from employers, employees, and government officials. Rani et al. estimated that this system has resulted in 1171 different statutory minimum wages in India. Aimed at acting as a floor beneath the collective bargaining process, this approach to setting a national minimum wage in may be considered as a model to be emulated by South
The current Brazilian national minimum wage programme was implemented in 1988 with the aim of providing a subsistence income for workers as well as their families. The national minimum wage is determined at least once a year by the federal government. The adjustment of the minimum wage is determined by the executive, and is based on economic datasets, including the previous year’s inflation rate, the two previous years’ GDP data, as well as social factors. Since the 1990’s the national minimum wage has been increased at a rate higher than inflation, however, recent fiscal constraints on the Brazilian economy have seen increases fall closer in line with inflation.
There is strong sentiment from COSATU that the Brazilian case study be used as a model to be emulated by South Africa in the creation of its own national minimum wage. Coleman has stated that while Brazil faces many of the same socio-economic issues as South Africa, such as high unemployment, high income inequality, and high poverty levels, it continues to make strides in reducing these issues through the use of an aggressive national minimum wage, giving rise to what he has termed as the “Brazilian Miracle.” It has been acknowledged that the Brazilian application of the system has resulted on poverty-reduction as well as economic growth. However, the model was applied during a time of already strong economic growth, which supported the higher minimum wages and resisted the job destruction and inflation fears generally associated with minimum wages. Seekling and Nattrass (2015) argue that South Africa currently find themselves in entirely different economic conditions as compared to those which Brazil found itself at the implementation of its current system. As such, it is argued that the economy in this climate would be unable to support higher minimum wages in the same way. The authors are further critical of Coleman’s approach to the Brazil-South Africa comparisons. They highlight issues ignored by Coleman, such as a difference in purchasing power parity. Kanbur points out that Brazil’s prudent fiscal policy and general macroeconomic stability contrasts with the current situation in South Africa. Further, he notes that inequality in Brazil was simultaneously addressed through a large redress of the education sector, albeit with a decade long time-lag. Such an aggressive stance to setting the minimum wage in the face of a cycle of poor economic growth, a lack of a coordinated macro approach, the political and economic undesirability of any short-term job losses, and the current pressure on the fiscal position of the government, which would feed inflation concerns, it would be inadvisable to pursue an aggressive national minimum wage rate, as done by Brazil. France France implements a strong national minimum wage system, which adjusts automatically to economic growth. Termed the SMIC (Salaire Minimum Interprofessionnel de Croissance) system and implemented in its current form in 1970, this “guaranteed interprofessional national minimum wage” is adjusted annually depending on inflation, measured with a form of an adjusted Consumer Price Index, as well as purchasing power changes, social factors, and macroeconomic factors like employment levels and productivity. SMIC represents the trend in most of Europe to adopt a “living wage” approach to minimum wages, which not only acts as a guaranteed minimum income which seeks to cover basic household expenses, as with previous systems, but also seeks to narrow the wage gap and distribute economic growth more evenly. Continued meaningful participation in the economy is guaranteed by the requirement that the real minimum wage can increase annually by no less than half of the real wage growth in the economy. Further, between annual adjustments, if the inflation rate breaches a 2% ceiling year-on-year, minimum wages …show more content…
While India utilises a national wage floor, it is set extremely low. Practically, individual sectors’ minimum wages are set independently in respective geographical areas, resulting in a minimum wage structure that is highly sectorally and geographically fragmented. Each sector in each geographical area has its own council, comprising representatives from employers, employees, and government officials. Rani et al. estimated that this system has resulted in 1171 different statutory minimum wages in India. Aimed at acting as a floor beneath the collective bargaining process, this approach to setting a national minimum wage in may be considered as a model to be emulated by South