Chapter 3: Who should set minimum wages

3.1 Consultation and direct participation of social partners

Social partners in full consultation

Whatever the machinery,1 governments should make every effort to establish and maintain the conditions for genuine social dialogue, a process which increases the chances that a minimum wage responds to the needs of the various parties and contributes to national development.2

The principle of full consultation with social partners in the establishment, operation and modification of such machinery is at the heart of the ILO Minimum Wage Fixing Convention, 1970 (No. 131), (Article 4.1).

Social dialogue plays a key role in a country’s social, political and economic stability, equity and democracy. It creates a framework of peaceful and orderly procedures with which to resolve potentially damaging disputes.3 When workers or employers feel that they have been left out of decision-making, or not well represented in the decision-making process, there will be less “buy-in” or ownership of minimum wage policies – and protests or strikes may occur.

Direct participation

Convention No. 131 also calls – wherever it is appropriate to the nature of the machinery – for the direct participation of social partners.

Social partners’ direct participation in fixing the rate and its adjustment should lead to balanced outcomes that are both enforceable and maintain social cohesion. In general, the involvement of social partners allows the concerns and priorities of those most directly affected by the minimum wage policy to be taken into account more effectively. This in turn is likely to secure greater authority and support for the minimum wage that will be fixed, and tends also to facilitate its effective implementation. representing the general interest of the country can be public officials with responsibilities in industrial relations or other related fields, or independent experts – such as academics – who are free from any conflict of interest.

1 Machinery refers to the mechanism through which minimum wages are set and adjusted.
2 ILO General Survey on minimum wage systems (2014), p. 119
3 Fashoyin, T. (2004). “Tripartite cooperation, social dialogue and national development”, International Labour Review, Vol. 143.4, pp. 341-72.