Appendix 3:
Minimum Wage Rates in Other Countries

1.

We noted in our first report that comparing minimum wage rates across countries was not straightforward for a number of reasons. There are differences between countries in the definitions of what counts towards the minimum wage, the definitions of earnings used, the age coverage and the sectors covered. In addition, other countries may have very different economic and social environments. There are also different tax and benefits systems. Hence it is difficult to make direct comparisons.

 
2.

Nevertheless, we have produced updates of the same commonly used measures as we did in our first report. These are shown in Tables A3.1 and A3.2. Table A3.1 compares hourly minimum wage rates for a selection of OECD countries at the end of 2000. The rates have been converted using both exchange rates and Purchasing Power Parities (PPPs). PPPs reflect differences in the cost of living between countries. Table A3.2 shows minimum rates as a proportion of median earnings.
Table A3.1
Comparison of Level of Minimum Wages [a] Across Countries
 
In UK £s, using
 
Exchange rates [b]
PPPs [c]
Australia [d]
3.67
5.06
Luxembourg
4.15
4.88
Netherlands
3.86
4.87
Belgium
3.89
4.79
France
3.86
4.57
Canada
3.03
3.93
Ireland
3.23
3.75
United States
3.62
3.71

United Kingdom
3.70
3.70
New Zealand
2.14
3.45
Japan
4.13
2.73
Greece
1.55
2.36
Spain
1.48
2.09
Korea
1.09
1.90
Portugal
1.11
1.81

Sources: OECD, Minimum Wage Database; and OECD, Main Economic Indicators 2000

Notes:

a. In all cases, the minimum wage refers to the basic rate for adults.

b. As of 30 November 2000.

c. Purchasing Power Parities for private consumption as of November 2000.

d. Federal minimum wage.

e. For countries where the minimum wage is not usually expressed as an hourly rate, the rate has been converted to an hourly basis assuming a working time of 8 hours per day, 40 hours per week and 173.3 hours per month.

Table A3.2

Adult Minimum Wages as a Percentage of Full-time Median Earnings (Men and Women) [a]
   
 
(%)
France
69.6
Portugal
64.8
Australia [b] — LFS
60.8
Belgium
59.1
Greece [c]
56.9
Australia [b] — ES
56.6
Ireland
55.5
Netherlands
52.1
New Zealand
49.9

United Kingdom [d]

46.0
Canada
43.8
Japan
41.1
United States
38.0
Spain
35.8
Korea
34.4

Sources: Minimum wages and median earnings for full-time workers: OECD estimates and OECD Earnings Structure Database

Notes:

a. In all cases, the minimum wage refers to the basic rate for adults. In some cases, the average earnings data for 2000 for the different groups of full-time workers and for manual workers in manufacturing are estimates based on extrapolating data for earlier years in line with other indicators of average earnings growth. All earnings data are gross of employee social security contributions.

b. Two estimates of average earnings are available based on the Labour Force Survey (LFS) or an Enterprises Survey (ES). The minimum wage is the Federal rate.

c. Manufacturing workers only.

d. Based on ONS central estimate.

 
3.

We need to be cautious about these figures because minimum wage rates are set at different dates from country to country. Moreover, the relationship between the minimum rate and median earnings will be influenced by the stage in the uprating cycle: the relative value will be higher at the time of uprating. For example, the rate we are recommending is estimated to be around 53 per cent of full-time median earnings (men and women aged 21 and over) in October 2001.

 
4. We presented information in our first report on the 1998 OECD estimates of the proportion of the workforce at or below minimum wages. Unfortunately, this has not been updated, because the data are not comparable across countries.

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