Which countries have the highest minimum wages in the OECD?

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Stefan Ellerbeck, Senior Writer, Formative Content

• Japan has become the latest OECD country to put forward plans to raise its national minimum wage, by a record 3.3%.
• Luxembourg, Australia, New Zealand, the UK and Germany pay some of the highest national hourly minimum wage rates.
• However, some argue that a minimum wage doesn’t always reflect a ‘living wage.’

A minimum wage is the lowest rate an employer can legally pay their staff. And most countries have it in place, as a way of stopping the exploitation of workers and also helping lower-income families.

Most countries in the world have minimum wage legislation. Image: International Labour Organization.

But as the chart above shows, some countries still don’t have a minimum wage. Opponents of a statutory minimum wage argue that increased labour costs will force businesses to raise prices, thereby causing inflation. They also say companies may lay off workers leading to higher unemployment. However, advocates of minimum wage legislation say it stimulates the economy by increasing consumer spending power, thereby reducing poverty and helping address inequality.

Japan’s push to increase the minimum wage

Japan appears to be taking the latter path by announcing plans to raise its minimum wage to help low-income households cope with the increased cost of living. If finalized, it will go up by 31 yen to 961 yen per hour ($7.16) this fiscal year. That would be a record 3.3% in terms of percentage increase and the overall amount, according to Bloomberg.

The world’s highest minimum wage rates

Japan ranks mid-table for minimum wage levels amongst the 38 countries who form the Organisation for Economic Co-operation and Development (OECD). The following countries are among the highest for national minimum hourly rates (based on recent equivalent US dollar exchange rates), according to WageIndicator.org:

Luxembourg

The tiny European state has a minimum approximate hourly wage of 15.66 euros ($15.87) for skilled workers over 18, making it the country with the highest minimum wage in the world currently. Unskilled workers and younger people qualify for less.

Australia

Australia recently increased its national minimum wage to AUS$21.38 per hour ($14.97) There are different minimum wage rates in Australia, with those under 21 years of age, as well as apprentices, paid less.

New Zealand

New Zealand mandates that all adults must be paid a minimum of NZ$21.20 per hour ($13.41). This rate is for adults 16 years or older. However, anyone under 18 must be working for an employer for six months to receive the full rate.

Netherlands

Full-time workers in Holland are legally obliged to be paid 10.14 euros ($10.27) per hour. However, people aged under 21 receive less.

UK

The national minimum wage in the UK is £9.50 ($11.43) per hour. Like many other countries, the rate people receive is age-dependent. A worker needs to be 23 or older to receive the full hourly minimum wage.

France

Nearly all workers in France can expect to receive 10.57 euros ($10.71) per hour. However, young apprentices can be paid substantially less under a tiered system.

Germany

Germany increased its national minimum wage to 10.45 euros per hour ($10.59) in June 2022. It applies to all workers over 18, with the exception of people working on a freelance basis and some trainees and interns.

Not everyone gets a fair deal

Whilst most countries in the world have minimum wage policies, they’re not always respected or enforced. Globally, an estimated 266 million workers earn less than the minimum wage, either due to ineligibility or non-compliance by employers. Minimum wages sometimes also don’t reflect a true living wage, say experts, in that they don’t enable people to meet their basic needs. Moreover, wages globally on average are lower for women than for men.

“Governments should ensure that legal minimum wages reflect living wages,” said Rachel Cowburn-Walden, Global Director of Human Rights at Unilever and a member of the World Economic Forum’s Global Future Council on the New Agenda for Work, Wages and Job Creation. “Where this is not the case, companies should at least pay living wages whilst continuing to recognize the right to freedom of association and collective bargaining, and understanding that living wages represent the floor – not the ceiling.”