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DOI: https://doi.org/10.34069/AI/2023.62.02.15
How to Cite:
Chanyshev
Chanysheva, G., Krasnov, Y., Tarasenko, V., Hudz, A., & Chanyshev , R. (2023). Minimum wage in the system of state social
guarantees: International comparative-legal experience. Amazonia Investiga, 12(62), 168-174.
https://doi.org/10.34069/AI/2023.62.02.15
Minimum wage in the system of state social guarantees:
International comparative-legal experience
Мінімальна заробітна плата у системі державних соціальних гарантій:
міжнародний порівняльно-правовий досвід
Received: February 10, 2023 Accepted: March 26, 2023
Written by:
Galiya Chanysheva1
https://orcid.org/0000-0003-1852-8068
Yegor Krasnov2
https://orcid.org/0009-0008-6869-0913
Viktoriia Tarasenko3
https://orcid.org/0000-0001-8865-5148
Anna Hudz4
https://orcid.org/0000-0001-6230-4171
Rashid Chanyshev5
https://orcid.org/0000-0002-3592-7223
Abstract
In the conditions of the development of the
market economy, attention is drawn to the
problem of the appropriate level of wages as a
state social guarantee. The level of earnings of
each working citizen affects the total income of
the population, which contributes to the
formation of demand for goods, works, and
services and the level of the economy. The
purpose of the work is to study the current
problems of the payment mechanism in current
conditions and establish the minimum wage in
different countries. The research methodology
includes such methods as the dialectical method,
the method of analysis and synthesis, deduction
and induction, the method of analogy, the
historical-legal method, the systematic method,
the formal-legal method, and the comparative-
legal method. As a result of the conducted
research, the minimum wage standards in
Ukraine, despite the increase, remain one of the
lowest among European countries. It is outlined
1
Doctor of Legal Sciences, Professor, Head of the Department of Labor Law and Social Security Law of the National University
"Odesa Law Academy", Ukraine.
2
Ph. D., Associate Professor, Judge of the Supreme Court, Ukraine.
3
Ph.D., Associate Professor of the Department of Labor Law and Social Security Law of the National University "Odesa Law
Academy", Ukraine.
4
Ph.D., Associate Professor of the Department of Labor Law and Social Security Law of the National University "Odesa Law
Academy", Ukraine.
5
Ph. D., Associate Professor of the Department of Information Technologies of the National University "Odesa Law Academy",
Ukraine.
Chanysheva, G., Krasnov, Y., Tarasenko, V., Hudz, A., Chanyshev , R. / Volume 12 - Issue 62: 168-174 / February, 2023
Volume 12 - Issue 62
/ February 2023
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that in European practice, three main approaches
are used to establish the minimum wage: based
on the minimum needs of the employee; based on
establishing a size that is 2-2.5 times higher than
the subsistence minimum, and based on a
comparison of the sizes of the minimum and
average wages.
Keywords: minimum wage, social guarantees,
wages, wage system, state regulation of wages.
Introduction
With Ukraine's course towards European
integration, a strategic goal has been declared -
"achieving European living standards" and
ensuring basic state social standards and
guarantees at the level of the European Union
countries.
Based on the analysis of the experience of
foreign countries, which was carried out by
experts of the International Labor Organization
(hereinafter – the ILO), several normative legal
acts were adopted regarding the standards of
minimum wage provision. Thus, the Convention
of June 16, 1928, No. 26 "On the Establishment
of a Procedure for Establishing a Minimum
Wage" (International Labor Organization, 1928)
provides that the established minimum wage is
mandatory for of the respective employers and
employees and shall not be reduced either by
individual agreement or, unless there is a general
or case-specific authorization by the competent
authority, by collective agreement. The same
provisions are followed in Art. 2 of the ILO
Convention of June 22, 1970, No. 131 "On the
Establishment of the Minimum Wage with
Special Consideration for Developing Countries"
(International Labor Organization, 1970), in
particular, emphasized the legal meaning of the
minimum wage: it is not subject to reduction,
therefore, the employer has no right to pay the
employee a wage below this limit.
Following international standards, the level of
the minimum salary is considered as a lower
limit, which should guarantee the satisfaction of
the basic life needs not only of the worker, but
also of his family, while, as a rule, the "set" of
such needs is not defined, but the possible criteria
for their establishment are indicated.
The Charter of the European Community dated
December 9, 1989, "On the Basic Social Rights
of Employees" (European Community, 1989)
defines that employees should be provided with
a fair wage, that is, a wage sufficient to to ensure
a decent (satisfactory) standard of living, in
addition, it is established that in the case of
deductions from wages, measures should have
been taken to continue receiving the necessary
funds for the employee and his family members.
So, as we can see, international documents
provide for the obligation to ensure minimum
standards for remuneration.
The current legislation of Ukraine practically
duplicates the recommendations of the ILO. In
particular, the Constitution of Ukraine, the Code
of Labor Laws, and the Law of Ukraine "On
Remuneration" state that the amount of the
minimum wage is determined taking into account
the needs of employees and their families, the
value of which is sufficient to ensure the normal
functioning of the body of an able-bodied person,
the preservation of his health food products, a
minimum set of non-food products and a
minimum set of services necessary to satisfy the
basic social and cultural needs of an individual,
as well as the general level of average wages,
labor productivity and the level of employment
(Law 254k/96-VR, 1996; Law 322-VIII, 1971;
Law 108/95-VR, 1995). However, the size of
such "minimum" required provision differs in
each of the states.
The article analyzes the institution of wages and
investigates the issue of guarantees for the
realization of workers' rights to fair wages in
different countries, notes the problematic issues
of the implementation of the wage function and
its impact on the country's economy, taking into
account various factors.
Theoretical Framework or Literature Review
During the comparative legal analysis of the
minimum wage in the system of social
guarantees, the works of the following scientists
were studied: Baranov, Galayda and Ryabukh,
Gerasymenko, Golosnichenko and Dovzhik,
Klymenko, Kupina, Krokhmal and
Parkhomenko-Kutsevil, Laptev, Lopushnyak,
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Mashevska, Pyzhova, Rekun, Staverska,
Shevchuk, and Gaidar, and Utvenko.
In the work of Baranov (2011), the global
experience of building an effective system of
remuneration at the enterprise was analyzed. In
particular, the author researched the foreign
experience of remuneration systems, personnel
remuneration models, and their relationship with
the results of the work of an individual employee,
business unit, or enterprise as a whole. The
criteria for the effectiveness of the labor
motivation system and its effects on achieving
the strategic goals of the enterprise are analyzed.
The European experience of applying effective
systems of remuneration and motivation of the
company's employees became the object of
research by Galayda and Ryabukh (2016). The
authors concluded that one of the most important
problems of the organization of wages at
enterprises in Ukraine is the lack of an effective
mechanism for the interest of employees, which
would be able to ensure as close as the possible
relationship between their wages and the actual
labor contribution of each employee and the
enterprise team as a whole, on the one hand, but
was economically justified and would
correspond to the company's development
strategy – on the other hand, it would not
contradict either the laws of the market economy
or the principles of social responsibility of
business and social partnership.
Global standards and Ukrainian realities
regarding the minimum wage are explored in the
article by Gerasymenko (2011). The author notes
that currently, Ukraine is significantly behind
European countries in terms of the minimum
wage. The author also researched that, taking into
account changes in economic indicators and
price growth in many countries, there is an
automatic algorithm for increasing the minimum
wage. However, in the legislative norms of a
significant number of states, there are no clear
instructions on when it is necessary to increase
the salary, and, therefore, in recent years, the gap
between the minimum and average salaries has
become obvious.
Problematic issues and ways to solve them
related to wages are considered in the article by
Golosnichenko and Dovzhik (2014). The author
confirms that the improvement of wage systems,
the search for new solutions, and the in-depth
study of Western experience can help solve
several problems related to wages in Ukraine,
qualitatively improve its condition, and create the
basis for increasing the interest of employees in
highly productive work shortly.
The international legal and domestic context
regarding social security standards and
guarantees is regarded in the work of Klymenko
(2019). Peculiarities of legal regulation of decent
wages are studied in the research of Kupina
(2021). The general principles of state
management in the sphere of labor remuneration
were studied in the study of Krokhmal and
Parkhomenko-Kutsevil (2022).
Theoretical aspects of remuneration in the
context of effective motivation of the company's
personnel are disclosed in the work of Laptev
(2015).
The practice of Ukraine and European countries
regarding the minimum wage is analyzed in the
work of Lopushnyak (2017). The author suggests
that the restoration of inter-job relations should
bring the subsistence minimum to its actual size
and, using the experience of EU countries,
establish a legislative norm of mandatory
adjustment of the major state social standards and
guarantees in the field of income following the
inflation index in the event of an increase in
consumer prices by more than 2 %.
Mashevska (2022) noted the peculiarities of
foreign experience regarding the use of labor
systems and employee motivation.
Pyzhova (2020) analyzed the triad of the
interaction of the minimum wage, fair wages, and
a decent standard of living in the context of
international experience. Thus, the researcher
concluded that the core of the category
guaranteeing the realization of workers' rights to
fair remuneration is the issue of the minimum
wage and fair remuneration. The author analyzes
the Conventions of the International Labor
Organization on the raised issue. At the same
time, it is remarked that the minimum wage
should be established taking into account the
interests of employees, as well as their family
members, and at the same time taking into
account the interests of economic development.
The challenges and prospects of the state
regulation of labor remuneration in Ukraine were
investigated in the work of Rekun (2017).
Staverska, Shevchuk, and Gaidar (2018) also
drew attention to the state policy of regulating
wages in the context of sustainable development
of the country. Utvenko (2018) analyzed in detail
the theoretical foundations of the system of social
security and social support.
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Given the above, the study of such a social
guarantee as the minimum wage was studied
among scholars. However, a comprehensive
study of international-legal experience on this
issue has not been conducted so far.
Methodology
The dialectical method played an important role
in the study of the international legal experience
of minimum wage regulation. Thus, with the help
of general laws of development, which reflect the
development of all spheres of social life and
thinking, and not with partial laws, which reflect
the development of only one sphere of reality, it
was revealed what the legal nature of wages is,
by what norms it is determined, on what grounds
it is assigned, and why it is important to ensure
minimum wage standards for workers.
In studies of international experience regarding
wages, the method of analysis and synthesis
should be rationally applied to examine the
general interpretation of social guarantees and
their essence, the characteristics of the properties
of social legislation, the establishment of
regularities regarding the application of the
norms of social legislation, as well as the
selection in the legislation of Ukraine of such
elements that influence the formation of
standards regarding the payment of the minimum
wage.
Deduction and induction are of great value for
the analysis of legal categories related to the
subject of state social guarantees from individual
to whole for the detailed disclosure of the
problem, and analogy as a method that
contributes to the identification of both external
and internal factors that affect the process of
providing minimal guaranteed by the state.
The use of the historical-legal method provided
wide cognitive opportunities, as it made it
possible to reveal the essence of the investigated
phenomena in cases where it is not obvious,
based on the available facts, and to identify the
general and recurring, necessary and natural, on
the one hand, and qualitatively excellent - on the
other hand. With the help of a detailed
retrospective analysis of the establishment of the
minimum wage in the world and on the territory
of Ukraine, it can be stated that the direct
historical influence forms the current state.
Thanks to the historical-legal method, the
formation of social legislation was characterized
in chronological order, as a result of which it will
be clear what economic, political, and social
conditions influenced the adoption of this or that
act and, in turn, reveal the features of this or that
stage. Also, taking into account the historical
features, it is possible to single out the
shortcomings of the legislation on payment of
labor at certain stages and determine the
directions of optimization of this area.
The use of the system method is conditioned by
the need to obtain a very specific result, when it
is impossible to expect that this result will appear
by itself, in a natural way, and it has to be
constructed under the conditions of time and
resource limitations, as well as the complication
of social processes. The system method serves as
an adequate means of research and development
not of any objects that are arbitrarily called a
system, but only of those that are an organic
whole. Therefore, thanks to the use of the system
method, it became possible to study the
minimum wage in the system of social
guarantees as a complex phenomenon.
With the help of the formal-legal method, the
content of legal norms or phenomena in their
stable state was isolated, and the general features
of the researched object, its features, structure,
and classification were determined. Due to the
connection with the rules of logic and language,
the specified method helped formulate the
definition of legal concepts, make their
description, classification, and systematization,
and create a coherent conceptual system.
The application of the comparative legal method
was laid out in the most significant part of the
materials on the social legislation of foreign
countries. Also, this method became useful for
the optimization of national social legislation, as
well as the comparison of legal norms of Ukraine
in the social sphere with the norms of foreign
countries making it possible to identify common
and distinctive features and understand the
patterns of development of social legislation in
the world.
Results and Discussion
Before analyzing the international comparative-
legal experience regarding the establishment of the
minimum wage, let's find out what role the payment
of labor plays as a state social guarantee.
In the general sense, remuneration is understood as
remuneration, as a rule, in the monetary equivalent,
which the owner or a body authorized by him pays
to the worker for the work performed by him
(Golosnichenko, & Dovzhik, 2014).
The payment of labor performs the following
functions (Table 1):
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Table 1.
The Functions of Ppayment of Labor.
The Function of Payment of Labor
Reproducible
providing employees with the necessary life benefits for the reproduction of
the workforce;
Stimulating
establishing the dependence of its size on the quantity and quality of work of a
he enterprise;of tspecific employee, his labor contribution to the results
Regulating
optimization of the placement of the workforce by regions, and branches of
the economy, taking into account the market situation;
Social
reflects the measure of living labor in the distribution of the consumption fund
between the employee and the owner of the means of production;
The function of
forming the solvent
demand of the
population
coordination of solvent demand, which is usually understood as the form of
hand, and theidentifying needs provided by buyers' funds, on the one
production of consumer goods, on the other.
Data Provided by Golosnichenko, & Dovzhik (2014).
The specified wage functions are closely
interrelated, but only with their totality is wage
efficiency achieved. Given this, it is essential to
ensure the minimum wage is under the real needs
of the population to perform the functions of
remuneration.
Therefore, a vital social guarantee operating in
the world is the minimum wage. Despite its
universal nature and the presence of international
legal regulation, this noteworthy indicator of the
population's standard of living does not always
meet its real needs. We will analyze the
international experience on this issue in more
detail.
The international practice uses three approaches
to calculating the minimum wage (Table 2):
Table 2.
International approaches to calculating the minimum wage.
Approaches to Calculating the Minimum Wage
Consideration of the minimum needs of the
employee
The size of the minimum wage is determined
based on the subsistence minimum.
2.5 times higher than the -Setting a size that is 2
subsistence minimum
Expenses for providing a "consumer basket"
o account.are taken int
Consideration and comparison of minimum and
average wages
This comparison takes into account EU
indicators and ILO recommendations.
Data provided by Lopushnyak (2017)
The minimum wage institute operates in many countries. But the models for establishing minimum wage
standards are different.
Table 3.
Models of setting the minimum wage in foreign countries.
Models for Setting the Minimum Wage
Model
Country
essenceThe
Determination of minimum
standards by the government
Portugal, Slovenia, Spain,
the Czech Republic, Poland,
Greece, Slovakia, Croatia,
the Netherlands
The level of the minimum wage is
determined unilaterally by the
government
Determination of minimum
standards by the government,
taking into account the
recommendations of social
partners
Bulgaria, Estonia, Latvia,
Lithuania, Hungary,
Romania, Germany, Ireland,
Great Britain
Consultation with a special ocial advisory body or group of s
partners
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Determination of the minimum
takes place in accordance wage
with the established rule and on
the basis of consultations with
social partners
Belgium, Luxembourg,
Malta and France
Periodic review of standards and
indexation mandatory automatic
according to the consumer price
index
Establishing the federal and
regional minimum wage
USA
On the basis of consumer prices
and standards, minimum wage
standards are established both
nationally (minimum) and
minimum in each region
g only the regional Establishin
minimum wage
Japan, Canada
Minimum wage requirements for
each region are established
There are no laws on minimum
wage standards
Finland, Norway, Italy,
Germany, Denmark,
Austria, Sweden
There is a tradition of concluding
collective agreements between
interested parties
Data provided by Gerasymenko (2011).
Despite the establishment or lack of minimum
wage standards in various countries, today, in
countries with a developed market economy,
considerable attention is paid to strengthening
the stimulating role of tariff wages, the basis of
which is the concept of a flexible tariff. That is,
it is the improvement of the qualifications of
employees and the stimulation of individual
results of their work, primarily production and
quality of products (Mashevska, 2022). At the
same time, the mechanism of state regulation of
wages is increasingly based on the ratio of such
components as the minimum wage, the limit of
its growth in the period of inflation, tax policy,
the general procedure for indexation of incomes,
forms, and systems of labor remuneration, etc.
(collective contractual regulation on branch
level); amounts of tariff rates and salaries,
surcharges, and allowances (collective
agreements); average salary (labor market). This
mechanism opens up good opportunities for
social dialogue and social partnership.
Taking into account the fact that, compared to the
CIS countries, the minimum wage in Ukraine is
lower than in Azerbaijan, Armenia, Belarus, and
Kazakhstan and much lower than in European
countries, Ukraine needs to implement standards
for the comprehensive assessment of an
employee to pay for his work, providing
opportunities for his proper financial condition.
Establishing effective wage levels, optimizing
wage costs, and at the same time developing and
applying an effective motivational mechanism is
an important and difficult task. However, it is
only by implementing positive European and
international experiences that it is possible to
solve some problems that are reflected in the
general state of the country's economy.
Conclusions
1. The payment of labor performs such
functions as reproductive, stimulating,
regulatory, and social, and the function
forms the solvent demand of the population.
Wage functions are interrelated, but wage
efficiency can only be achieved when they
interact.
2. Among foreign countries, there are different
models of wage setting: determination of
minimum standards by the government;
determination of minimum standards by the
government, taking into account the
recommendations of social partners;
determination of the minimum wage takes
place under the established rule and based on
consultations with social partners;
establishment of federal and regional
minimum wages; establishing only the
regional minimum wage; there are no laws
on minimum wage standards. Each of the
models contributes to ensuring the social
function of the state.
3. The study of the experience of foreign
countries and the provisions of international
legal acts made it possible to assert that
during the development of the institution of
labor remuneration, it is important to
guarantee the rights of workers to fair wages
and at the same time implement a system of
motivating workers to receive higher wages
per their efficiency.
As for further scientific research, we consider it
necessary to analyze in detail the ways of solving
the problem of forming and providing minimum
state social guarantees regarding the minimum
wage both in Ukraine and abroad.
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