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Reasonable Minimum Wage Would Not Reduce Employment

Orietta Qi - 02/04/2012

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Unemployment by economic theory, the minimum wage stipulated by the Government on the market are usually higher than the minimum conditions of people employed, but usually the minimum conditions for employees in enterprises as the real wages paid, so bring the minimum wage system will increase the burden on enterprises, business Enterprises will be through layoffs to maintain balance.

Many people thus believe that the problem of employment is the largest political, if we raise the minimum wage will affect the job market, in the treatment of various parts of China to raise the minimum wage, should be careful.

In China, some people worry that raising the minimum wage may reduce employment and thus hinder economic development, but a reasonable minimum wage would not reduce employment, it will only reduce unfair.

In fact, the establishment of a national minimum wage jobs the country has not suffered a reduction in the past decade, the British experience has proved this point. In 1999, when the British introduced the minimum wage, it was predicted that job opportunities would be reduced, deterioration of people's lives will be so, but it is not.

Reasonable minimum wage can also increase domestic demand and promote economic growth, because low-wage people will consume most of their income. Europe from the crisis situation, the central role of the minimum wage is to ensure that the purchasing power.

The question is how to determine a reasonable minimum wage. Wages should reflect changes in productivity, that is, wage increases should be equal to the rate of inflation and productivity growth, and.

Minimum wage workers should be able to meet the basic needs of life, of course, this amount in different countries and regions are different, but the minimum wage accounts for the ratio of the average wage is less certain. Generally believed that 60% of the national average wage should be the poverty threshold. In fact, the minimum wage in most countries are below this threshold.

Labor compensation share of GDP, down is becoming a topic of public concern, the European GDP, the proportion of paid workers (which means that the wealth created by workers in the proportion) in the past for a long period of time continued to decline, has been From the early 90s of last century 65% to 57% in 2007. At the same time, the proportion of capital gains are on the rise. During the financial crisis, the profit rate of decrease greater than wages, workers compensation accounting has increased. But now they began to decline.

Declining share of labor compensation, which means less than the wage growth rate of labor productivity growth rates. EU-15 countries over the past decade has established a modest wage situation. But the decline means that the proportion of workers paid the balance between employers and employees before being broken into a situation not conducive to working.

Reduce the bargaining power of workers can use the context of globalization, low-wage countries and regions compete to explain. As international competition (such as factories moved to the lower wages of foreign workers more unprotected), workers fear losing their jobs, and thus to make concessions on the wage demands. In addition, from China, India, Eastern Europe and other countries hundreds of millions of workers into the global economy, which resulted in fierce competition, leading to labor relations to the benefit of the capital of the direction of change.

Currently the total number of 15 countries in the EU over 20 million people who earn wages, more than 15% are low income, that is, their hourly wages below the national average wage of two-thirds. EU proposes "social Europe", the core of the political goal is to ensure that every person can get a decent job the minimum wage.

In China, some companies even good companies to benefit the local minimum wage as the standard of wages to employees to determine that the minimum wage should be regarded as a misunderstanding, or more precisely, a distortion. The minimum wage is the minimum wage paid to full-time employment standard. For in the end how many people should get the minimum wage, the differences between different countries is very large. But generally speaking, take the minimum wage should be the minority, the proportion of 10% to 20%, and other people should be higher than this level.