Minimum wage coverage and compliance in developing countries

Using household and labour force survey data from 11 developing countries, the authors calculate rates of minimum wage compliance for formal/informal employees covered by current legislation and assess the average “depth” of violations. Though compliance is negatively related to the ratio of minimum to median wages, countries with a national minimum wage set at a meaningful level typically achieve higher compliance rates than countries with occupational or industry-specific minimum wage systems. However, better compliance – especially for women, ethnic groups, and unskilled and informal workers – also depends on contextualized yet comprehensive minimum wage policies combining union/employer involvement, awareness-raising and credible enforcement.