The establishment of minimum wage is a common practice in many countries as governments try to address the needs of the most vulnerable groups. At that, this type of regulation can do more harm than good to people in many cases. First, workers receive a specific amount of funds sufficient to maintain some living standards. Nevertheless, the problem of poverty is not resolved effectively, although it is the primary goal of such incentives.
When minimum wages are increased, the level of unemployment often grows, and the one of informal employment grows. Another outcome is the reduction of working hours as employers start working less and receive lower wages, which is not beneficial for workers as their income decreases. Such initiatives lead to lower compliance, so the outcomes are hardly visible.
Some of the possible measures to be undertaken to help workers more effectively may include subsidies, free training options, and high safety standards. One of the major areas of concern is workers’ safety and working conditions, as low-skilled employees have to work in quite improper and often hazardous conditions. The government should focus on this area, which will have a definite positive effect. Subsidies may also be provided to help the most vulnerable groups of people. Employers that provide higher wages to their workers (unskilled, seasonal, and other groups) can pay lower taxes. The government may provide monetary benefits to people having low-paid jobs or offer training and development opportunities to help them acquire skills and land better jobs.
