The Impact of Minimum Wage Hikes on Global Inflation and Financial Burdens
Inflation rates around the world are finally starting to cool off after the global pandemic and Russia’s invasion of Ukraine. However, individuals everywhere are still feeling the strain on their wallets. National governments, including Britain, have responded to this cost-of-living crisis by implementing minimum wage hikes.
On October 2nd, the UK announced that it would be raising its minimum wage to a minimum of £11 ($13.40) per hour, effective from April next year. This increase aligns with the recommendations provided by the country’s Low Pay Commission. It is estimated that this change will benefit approximately two million low-income earners in the UK, according to the Chancellor of Exchequer Jeremy Hunt’s office.
The UK is not alone in this global trend, as many countries seek to alleviate financial burdens on their citizens amidst decreasing purchasing power. Let’s take a look at the real minimum wages in Organisation for Economic Co-operation and Development (OECD) member countries, which take into account inflation.
Countries with the Highest Minimum Wages
France currently offers the highest real minimum wage among OECD nations, at $13.80 per hour. This increase took effect in May. In July, Australia increased its minimum pay to $13.60 per hour, matching Germany and Luxembourg following the latter’s rate hike in April. New Zealand takes the fifth spot with a minimum wage of $13.20 per hour, which was established in March.
Countries with the Lowest Minimum Wages
On the other end of the spectrum, Malta, Mexico, Brazil, Colombia, and Chile have the lowest nationally mandated minimum wages for workers in real terms. Malta holds the last place spot with a guaranteed minimum wage of just $1.50 per hour. Mexico recently increased its hourly wages by 20% to $1.80 in 2023. In May, Brazil raised its minimum wage by 1.38% to $2.40 per hour. Colombia set its minimum wage at $3 starting from the beginning of this year, while Chile’s minimum wage is currently at $3.70 as of September.
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