The OECD is committed to raising the minimum wage to cushion inflation

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Given the escalation of inflation, the OECD considers that it should not interfere with the increase in minimum wagesbut, failing that, it should be encouraged to cushion the blow for the most vulnerable sectors, as well as promote social policies to offset the increase in energy prices. “Several countries have room to go beyond current minimum wage levels and protect, at least partially, the most vulnerable workers from rising prices,” she says.

In a report dedicated to the minimum wage in these times of inflation, published this Friday, the Organization for Economic Cooperation and Development (OECD) it doesn’t say what those countries are, but it does give some indirect clues. One of them is to compare it in relative terms (in each of the 30 countries of its 38 members in which there is a national minimum wage) with the median wage, that is, with the remuneration below which 50% of workers and above the other 50%.

On average, in the OECD the minimum wage represents 55% of the median, although that figure varies widely, from more than 70% in Colombia (92%), Costa Rica (81%), Chile (72%), and Turkey (70%), to just 29% in the United States. Spain is below the average, with 48%, a percentage that has risen notably since 2005 (it was then 37%), but which continues to be lower than that of other large European countries such as Germany (51%), the United Kingdom (57%) or France (61%).

The study authors also analyze the loss in purchasing power of the minimum wage in a dozen member countries between the end of 2020 and September 2022. The drop in real terms is particularly strong (more than 10%) in the United States, where there has been no There has been no revaluation in those seven quarters, and in the Netherlands.

They seek to reduce the loss of purchasing power

The loss of purchasing power is greater than 5% in Spain (the 5.3% increase in the minimum wage in January has not offset the impact of inflation) and in Poland, while it is between 0 and 5% in Germany, Greece, the United Kingdom and Japan. Faced with that, the purchasing power of the minimum wage in Australia has been maintained Y has increased between 0 and 5% in Belgium, France and, above all, in Chilewhere the minimum wage has had three increases in the period studied (3.2% in May 2021, 12.8% in May 2022 and 5.3% in August 2022).

The OECD emphasizes that, in the current context of record inflation in the last four decades that “disproportionately” affects the least advantaged, “minimum wages can become an even more important tool to protect the living standards of low-wage workers.” But it also points out that, beyond the increase in the minimum wage, other mechanisms must be used to protect the income of the most vulnerable, such as “specific and temporary” energy bonuses or “aid for active workers”.

Source: lainformacion.com

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