The case for increasing minimum wages in OECD countries

A recent OECD publication (‘Minimum wages in times of rising inflation’, December 2022) discusses how minimum wages can help shield the most vulnerable, low-income households from high inflation. Alongside negotiations with and between social partners to protect the purchasing power of a large share of workers in the lower and middle range of wage distribution, the OECD policy brief advocates using the minimum wage as one of the tools to help preserve the living standards of low-paid workers.

The brief argues that several countries can go beyond their current minimum wage levels and protect, at least in part, the most vulnerable workers from rising prices. The OECD does not explicitly identify the margins, but the brief contains several data points and arguments that support the idea.

According to TUAC there are at least three important reasons that would allow many OECD economies to increase minimum wages. They are detailed in the attached briefing.