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Abstract
This article outlines how a global minimum wage might be introduced having regard to the political, institutional, and technical barriers in its way. It reviews the issues surrounding minimum wages in the context of globalisation, and assesses the evolution of labour standards in developing countries with a view to their application to a new minimum wages regime. The proposed global minimum wage rests on four pillars: (i) the World Bank's international poverty line recalculated as a universal wage floor; (ii) an electronic lighthouse that provides the global minimum wage translated for each developing country, and for the informal sector; (iii) involvement of the widest range of stakeholders; and (iv) commercialisation of its monitoring and remediation. The International Labour Organisation-World Bank 'Better Work' program is discussed as an example of how its governance might proceed.
1. Introduction
The issue ofthe establishment of a global minimum wage is both moral and economic. A future world may decide that wages below subsistence levels are neither tolerable nor desirable, both ethically and as a basis for industrial development. Like the abolition of slavery1, the concept of a global minimum wage is tied to the issue of trade. While establishing and broadcasting a global minimum wage would itself constitute a metaphorical lighthouse, a phenomenon known as 'the lighthouse effect' indicates that its application can penetrate even the informal economy.
Wage levels are probably the most important consideration for most workers, especially in developing countries where wages are the lowest. While labour rights and working conditions are valued, wages determine livelihood and self-worth. To its proponents, a minimum wage is a means of reducing poverty and inequality. It does this by putting a floor under wages, beyond which no one can be paid less. In so doing, it compresses income levels so that the income distribution is more equitable. Thus, it has the macroeconomic effect of increasing aggregate demand, since the lower-paid spend more of their income than do the wealthy-out of necessity. Yet to its opponents, a minimum wage has the effect of increasing the price of labour and thereby reducing employment. As former a US House Speaker, John Boehner, put it: 'When you raise the price of employment, guess what happens? You get less of it'...