ABSTRACT
The primary purpose of a statutory minimum wage is distributive. The level it is pitched at, along with the effectiveness of its enforcement (in small firms, enterprises outside the formal sector and among marginalised workforce groups), plays an important role in shaping patterns of pay equity as experienced by workers in paid employment (Brosnan 2003; Freeman 1996; Keese 1998). Three key indicators of pay equity include the incidence of low pay, gender pay equity and overall wage inequality. The generally accepted definition of low pay is a level of pay less than two thirds of the median wage. On this basis, if a minimum wage is set, for example, at around 60% of the median, then it is very likely to substantially diminish the incidence of low pay in an economy, as indeed is found in France (Caroli and Gautié 2008). Another pay indicator that has received considerable research attention is gender pay equity because women's overrepresentation in low-wage employment means they are more likely than men to benefit from the protection afforded by a minimum wage (Rubery et al. 2005). A higher minimum wage may be expected to either narrow the average gender pay gap or reduce female workers' risk of low pay compared to men's. In both examples, there may be ‘second-order’ effects as collective bargaining is combined with and influenced by changes in the minimum wage. For example, unions may be able to use collective bargaining to restore pay differentials eroded by an increase in the minimum wage, thereby potentially enabling some low-paid workers paid above the minimum wage to be lifted out of the low-wage zone. However, trade unions in male-dominated, low-wage sectors may be better equipped and/or more willing to restore pay differentials than unions in female-dominated sectors.
