Should the state fix the minimum wage? Danish experience

Representatives of Danish workers employers negotiating terms of wages

Update: 07.05.2019 The Danish prime minister Lars Løkke Rasmussen) has recently opened the debate about the minimum wage. He referred to the transport sector where foreign drivers are working with a low wage. He is open to discussing the issue. But all other political parties promptly denied the idea. They want to keep Danish mode

The issue of “minimum wage” is very much in discussion in the USA among the developed countries. In Asian countries like India and Bangladesh, people demonstrate in the street to demand better minimum wages.

In developing countries, there are legally mandatory monthly wages whereas in most western countries there is the law about minimum wage per hour.
A recent poll by CNBC shows that 70% of American want to raise the minimum wage. New York and Minneapolis have increased the minimum wage to 15 USD.

Economic law is not based on popular opinion. In recent years, many well-known economists argue that the legally binding minimum wage is helpful for the free market economy.

This legal matter discourages companies from hiring people. Some developing countries have raised the minimum wages significantly. That move has not helped the labor class. Employers have fired many workers.

In the free market, governments should not select the price for anything. The market will choose the cost of any product by the supply and demand of the market.

In the Nordic European countries as well as Switzerland, there are no legally mandated minimum wages. Those countries are doing better than the rest of wealthy nations. Their GDP per capita is very high, and there is a meager unemployment rate.

In Denmark, there is no legally mandated minimum wage but there is no dissatisfaction about it. Danes are against the idea that the government would set minimum wages. They think the wage matter should be entirely up to the workers and employers.

The generally accepted concept is that workers and employers have to agree on wages and the government does not intervene in salary negotiations.

In Denmark, all workers are organized by trade unions. They represent workers and bargain salaries with employers.

Trade unions take care of ensuring that workers are paid a reasonable wage. Trade unions have never let workers down. They have always been able to negotiate decent salaries for their members.

Every sector of the industry has its trade union. Construction workers have their trade union which is called 3 F which also represent agriculture workers while HK is the largest trade union which represents all workers in retail sectors. 
If trade unions cannot agree with employers on wages, they call for general strikes. There were a couple of general strikes in recent years.

Although there is no official minimum wage customarily accepted salary is minimum 140 kroner or 23 USD which is three times as much as the USA.

Wages automatically increase whet these are adjusted with inflation and price index.

There is no labor unrest Denmark. Workers are satisfied with their wages and benefits. 
Minimum wage is a political agenda. It is not economically helpful.

Leave a Reply

Your email address will not be published. Required fields are marked *