Institutional arrangements regarding Minimum Wage Setting in 195 countries

Most countries in the world have country-level policies concerning their minimum wage-fixing machinery. These policies vary widely, and therefore it becomes important to have adequate classifications of these policies. This paper reviews databases that classify country-level policies for determining minimum wages. Several databases - we found twelve - classify countries according to their minimum wage-fixing mechanisms and the coverage of these mechanisms. The mechanisms indicate whether the minimum wages are set by Law, by Collective Bargaining or any policy in between, the coverage indicates whether the minimum wages cover the entire dependent labour force or only one or more sections within the labour force.  The twelve databases vary with respect to the years covered, the countries covered and the characteristics coded. We restricted our analysis to the years 2011 to 2015. The number of countries covered in these databases range from 29 to 189, with 195 countries in total. The merged database reveals that countries are not classified similarly across databases. Between 75% and 93% of the countries apply a statutory minimum wage-fixing mechanism across years and databases. Less than one in ten countries relies solely on minimum wage setting by collective bargaining. In the EU28 plus Norway this percentage is relatively high, but in countries outside Europe it is far below 10%. Two ILO conventions refer to minimum wage-fixing mechanisms. Across years and databases roughly three in five countries that apply a statutory minimum wage-fixing mechanism have signed the oldest Convention (C26), whereas roughly one in three has done so with the most recent Convention (C131). Obviously, many more countries could have signed the Conventions. Only a few countries have signed the Conventions but do not have a statutory minimum wage-fixing mechanism. Among others a few EU28 countries rely solely on collective bargaining for minimum wage setting, and consider that as a national wide fixing mechanism. If countries apply a statutory wage-fixing mechanism, does the minimum wage then cover the entire dependent labour force? Globally, more than half of the countries with a statutory minimum wage apply differentiated minimum wages. Most frequently reported breakdowns are by industry or occupation. Countries with multiple minimum wage rates mimic collective bargaining, particularly when they break down the rates by industry or occupation. The aim of this paper is to generate a Minimum Wage Policies Database (MWPDB) from the merged dataset. Using a set of rules for generating data from the source databases, we indicate for almost half of the 195 countries the presence or absence of a statutory minimum wage for all five years from 2011 to 2015. For 16 countries no valid data is available for any year. Particularly for Europe and South America, MWPDB has satisfactory number of observations, whereas the opposite holds for the small islands in Oceania. The MWPDB results show that approximately nine in ten countries do apply a minimum wage policy, and that this is slightly increasing between 2011 to 2015.