COVID-19 Essential Workers Shake Up Minimum Wage Debate

After the arrival of COVID-19, we started calling them “essential workers” as the pandemic gave recognition to those who drove our buses, swept our floors, and filled supermarket shelves. These are the people formerly known simply as “low paid workers.”

The bitter irony of the effect of the health crisis on the world of work, compounded by the general disproportionate effect of the virus on the poorest communities, has started to fuel the global debate on the minimum wage.

As the pandemic triggers a global recession, it has amplified the perennial economic dilemma of how to ensure a decent life for workers, on the one hand, and protect the survival of vulnerable companies, on the other.

In places like the US, a clear majority of the population for the first time supports an increase in the federal minimum wage to $ 15. Other countries, including Australia, have suspended scheduled minimum wage increases following rejection by troubled employers. of liquidity.

Biden and the 15 Feds: The first federal minimum wage was established in the United States in 1938. Since then, 12 different presidents have increased it 22 times. Yet while living costs have skyrocketed there in the last decade, the minimum wage has not budged in 11 years. The Democratic Party made a minimum wage of $ 15 part of its platform before the 2016 election season. And President-elect Joe Biden has now pledged to push for the highest federal minimum wage increase in US history, from your current $ 7.25 to $ 15.

• Biden’s opportunity comes at a time when an unprecedented 67% of Americans surveyed (2019) voiced support for raising the federal minimum wage to $ 15 per hour.
• There are also signs that the minimum wage in the US is moving beyond bipartisanship, with 60% of Florida voters recently voting in favor of a ballot initiative to increase the state minimum wage from $ 8.56 to $ 8.56. 15 an hour by 2026. With Donald Trump garnered more than half the votes in the state, more than 1 million Florida voters voted for the president Y raising the minimum wage.
• A handful of states – California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, and New York – have already adopted laws that will increase the minimum wage to $ 15 over time, and 29 states and the District of Columbia have higher minimum wages. than the federal level.

Counterarguments: Outgoing President Donald Trump has claimed that raising the minimum wage would crush small businesses, the most common argument among skeptics. Pennsylvania Assemblyman Andrew Lewis said a proposal to gradually increase the state minimum to $ 15 as part of a recovery plan would “artificially inflate wages” and likely have the reverse effect: job losses.

Almost 10% of workers in the European Union live in poverty

Europe, one size fits all? A similar dynamic of the federal versus state system is also developing in the European Union. The pandemic has given new urgency to the idea of ​​establishing the first EU-wide minimum wage framework, as lockdowns in member states have paralyzed some of the minimum wage-paying industries, such as tourism and hospitality.

• The idea of ​​an EU-wide minimum wage has been raised several times in the past, but has been viewed by both governments and economists as unrealistic. What the European Commission is considering now is not a common minimum wage level, but rather a framework of rules.
• Of the 27 EU countries, 21 already have statutory minimum wages set by national governments, but workers are often affected by insufficient coverage and gaps in minimum wage protection.
• Therefore, the directive is not intended to be a single figure for the entire bloc, but rather a legal guarantee that workers in all states can earn a decent living. Current proposals suggest that the threshold should be 60% of the median salary and 50% of the median salary.
• Six EU member states (Sweden, Denmark, Finland, Austria, Italy and Cyprus) have wages established in collective bargaining between employers and unions. These countries will not be forced to install legal minimum wages, but thresholds will be established for bargaining agreements.

A group of local workers coming together for ” Latinos for Raise the Wage ” in Miami, USA – Photo: TNS / ZUMA

What’s behind the EU proposal? According to the Commission, almost 10% of workers in the European Union live in poverty. It is mainly among countries that joined in 2004 or later, such as the Czech Republic, Estonia, Bulgaria, Poland and Slovakia, where minimum wage levels are below average and wages are also lower in absolute terms.

• Bulgaria currently has the lowest minimum wage in the EU at € 312 per month, while Luxembourg has the highest at € 2,142.
• Union levels also vary widely across the 27 EU states and weak unions affect the ability of workers to demand higher wages or affect their country’s growth model.
• Low wages and weak unions, in turn, create a basis for social dumping, which is the practice of employers using cheaper labor than is normally available at their place of production or sale. They are also among the reasons for large-scale migration and population decline.
• The Commission has outlined the objective of its proposed directive to reduce pay inequality, help sustain domestic demand, strengthen work incentives and reduce the gender pay gap. He adds that the proposal will also help protect employers who pay decent wages to workers by ensuring fair competition.

A global trend? If the EU proposal is approved and implemented successfully, it could create a domino effect in other countries that have already taken the initial steps to set wage standards. Additionally, the pandemic-induced exposure of the gap between the value of frontline workers and the low wages they receive could further drive that effort.

• More than 90% of the 187 member states of the International Labor Organization (ILO) already have one or more minimum wages established through legislation or binding collective agreements.
• In the Americas and the Caribbean, there are very few exceptions, such as Suriname; and in Asia, there is no minimum wage in Singapore and Brunei. In Africa, exceptions include Ethiopia, Eritrea, and Somalia. Among the Arab states, there is no minimum wage in Bahrain or the United Arab Emirates.
• This does not mean that in all other countries minimum wages cover the majority of workers or that they are regularly adjusted for inflation. A global survey by the International Trade Union Confederation found that 84% of all respondents considered that their national minimum wage was insufficient for a decent life.

Greater flexibility: In most countries, the ILO has stated that national policy debates focus not so much on whether to have a minimum wage, but on how to make one work effectively. As the pandemic has forced governments to reach new levels of economic flexibility, countries are also finding shorter-term solutions for the minimum wage.

• Australia’s fair labor commission ordered a 1.7% minimum wage increase to $ 19.84 an hour in June, but the move faced pushback from employers recommending a pay freeze during the pandemic. The result is a compromise in which the majority of workers will get a raise, but employees in the sectors most affected by the coronavirus, including tourism and aviation, will see their salary increase delayed until February. The Sydney Morning Herald reports.
• Another example is the Philippines, where minimum wage, as well as microinsurance, is offered to casual workers who have temporarily lost their livelihood during the pandemic.
• In Qatar, the government has also decided on a deferred increase. After introducing a minimum wage in 2017, the government decided in August this year to raise the minimum by 25% that will take effect in six months.

The economy of the concert: However, flexibility also has a darker aspect, as digitization and an increasingly gig-oriented economy allow certain companies to circumvent labor policies.

• While technology has eliminated some of the more mundane tasks, it has also created new forms of exploitation, such as crowdsourcing platforms that circumvent minimum wage requirements by using “independent contractors” instead of employees.
• For example, job platforms like Amazon’s Appen, Clickworker, and Mechanical Turk are not required to pay their workers the national minimum wage. Instead, it has been reported that they sometimes pay “contractors” as little as a few cents an hour or even wages in the form of gift cards.
• According to a 2019 ILO study, two-thirds of American workers surveyed on the Amazon Mechanical Turk platform earned less than the federal minimum wage of $ 7.25 per hour.
• The same study showed that only 7% of German workers surveyed on the Essen-based Clickworker platform reported earnings above the national minimum wage of 8.84 euros per hour.