What Are 5 Developed Countries Without Minimum Wages?
There is much debate in the United States about the minimum wage. Many people feel it should be higher since those who earn the current federal minimum wage of $7.25 per hour are often just barely making enough from full-time jobs to cover their basic necessities.
Others feel any minimum wage discourages businesses from hiring more employees, so the issue of how much employees are compensated should be left to the free market to determine.
Advocates of both options often cite the minimum wage laws of other nations as evidence of the validity of their views. One oft-cited fact is many developed nations without minimum wages have drastically lower unemployment rates.
Proponents of repealing the minimum wage in the U.S. believe this points to the fact that countries that abolish baseline salary requirements have thereby encouraged companies to increase hiring.
Key Takeaways
- Most developed countries with no legal minimum wage still have wage minimums set by industry through collective bargaining contracts.
- Some such countries with no legal minimum wages but extremely robust union memberships are Sweden, Iceland, Norway, and Denmark.
However, the truth is most developed countries with no legal minimum wage still have minimum wages set by industry through collective bargaining contracts. The majority of their working populations are unionized. These unions negotiate a fair baseline pay rate on behalf of the participating workers so the government does not have to do it.
Since each industry may require vastly different things from its employees, it makes sense the minimum wage varies from business to business. Five developed nations without legal minimum wage requirements are Sweden, Denmark, Iceland, Norway, and Switzerland.
Understanding Developed Countries Without Minimum Wages
Sweden
Sweden is often touted as the poster-child for abolishing the minimum wage. However, the Nordic nation using a Nordic model is certainly no free-market free-for-all. Instead, minimum wages are set by sector or industry through collective bargaining. Their currency of choice is the crown.
Nearly all Swedish citizens belong to one of about 110 trade unions and employers’ organizations that negotiate wage rates for regular hourly work, salaries, and overtime.
Swedish law limits the workweek to 40 hours, just like in the U.S. However, it also dictates that all workers are entitled to 25 paid vacation days and 13 additional public holidays each year, far more generous than the U.S. standard.
Denmark
Relations between workers and employers in Denmark have been deemed downright harmonious due to the lack of a federally mandated minimum wage.
Trade unions negotiate for workers to be paid a reasonable wage.
Iceland
Iceland does not receive very much attention except for its breathtaking scenery. However, this tiny island nation consistently ranks among the happiest countries on earth, along with every other nation listed here, because of its low crime rates, high wages, and happy, healthy populace. People like to retire there.
Employees in Iceland are automatically enrolled in trade unionswhich are responsible for negotiating baseline salaries for the industries they represent.
Norway
Norway is yet another northern nation that has eschewed a federally mandated minimum wage in favor of having union-negotiated wages set by industry. Norwegians enjoy good job security, healthy wages, and ample vacation time.
Basic hourly wages vary by industry. However, unskilled workers in the agriculture, construction, freight transport, and cleaning industries, for example, earn minimum rates ranging from $16 to $21 per hour, with increases based on experience and skill level.
Switzerland
On September 27, 2020, Swiss voters approved the minimum wage of 23 Swiss Francs (CHF) per hour for all industries.