Minimum wages and pay equity in Latin America

Dr. Damian Grimshaw and Dr. Marcela Miozzo were commissioned by the ILO to write this Working Paper, as an input for the preparation of the ILO Director-General’s Global Report to the 2003 session of the International Labour Conference.2 Their study examines the experience of minimum wage policy in Latin American, in respect of its effectiveness in reducing gender pay inequalities, especially at the bottom of the occupational hierarchy. The main goal of this study was to see how a minimum wage policy may be used as a tool to promote pay equity, as women are represented disproportionately among the low paid.

Latin American countries were among the first to legislate on minimum wages, and evidence shows that the minimum wage has been used both as a redistributive tool to address poverty and as a stabilization tool to counter inflation. Problems of compliance with minimum wage legislation must be seen in Latin America against the background of macroeconomic turbulence, rapid political change, a high incidence of precarious work and a large informal economy. Comparison across countries shows a marked ‘societal effect’ in the way nation states have responded to international pressures to flexibilise labour markets, generating quite different scenarios of the way the minimum wage shapes patterns of equality in the wage structure. Argentina, Colombia and Mexico were selected as case studies to illustrate the diversity of the Latin American experience.