The impact of minimum wage and its determination methods on various dimensions of countries’ economies is undeniable, and for this reason, different countries deal with this issue in different ways, according to their economic policies. The International Labour Organization (ILO) has a specific definition for “minimum wage.” According to this organization, minimum wage is the minimum amount of money that an employer is obligated to pay to an employee for work done during a certain period, and it cannot be reduced through collective bargaining or individual contracts. Additionally, in Article 23 of the Universal Declaration of Human Rights and in Article 7 of the International Covenant on Economic, Social and Cultural Rights, the principle of fair wages that “ensure a decent standard of living for workers and their families in accordance with human dignity” is emphasized.

The issue of minimum wage is related to two concepts. The first concept is “wage”. Wage is the payment that is provided for the performance of work or services. The second concept is the issue of “minimum wage”; a level that cannot be lower and must be guaranteed. Therefore, this concept is related to the issue of work and is different from supportive concepts that address the necessary income level for achieving minimum living conditions, regardless of the person’s employment status. According to Article 41 of the Labor Law of the Islamic Republic of Iran, approved in 1990, “the minimum wage, without considering the physical and mental characteristics of workers and the nature of the assigned work, must be sufficient to support the average family, as determined by official sources.” (1).

Methods of determining minimum wage vary in different countries. In some countries, minimum wage is set nationally and is the same for all workers in that country. However, in other countries, determining minimum wage is the responsibility of management, councils of regions, provinces, or even municipalities. There are also countries where the minimum wage is determined through negotiations, known as collective bargaining, between workers and employers under the supervision of the government based on specific laws. Generally, the players involved in determining minimum wage in different countries can be governments, from federal to non-federal, regional governments, government bodies, or special entities known as minimum wage committees, as well as institutions responsible for monitoring and controlling wage levels at the national level. Labor unions also participate in this process by negotiating collective bargaining agreements. The concept of collective bargaining agreements is very common in countries like Sweden. In fact, this issue depends on the policies of each specific country, which must declare a wage that meets the criteria of minimum wage set by the International

For example, in Europe, the European Union’s statistical office reported at the end of 2023 that the average hourly income of the workforce on this continent is estimated at 30.5 euros and announced that the average annual salary of single employees without children is 26,136 euros, while working couples with two children have an average income of 55,573 euros. This is while in countries like Finland or Switzerland, there is no defined minimum wage at the national level. In Switzerland, this minimum wage is determined by cantons (national divisions) and in Finland, employers’ organizations and labor unions negotiate on the minimum wage in collective agreements for different sectors; a collective agreement known as TES in Finland.

According to the Eurostat report, or the European Union’s statistical office, the framework of regulations in the European Union regarding labor is precise and comprehensive, focusing on individuals’ working conditions, labor rights, access to information, anti-discrimination laws, and workplace safety. The report also states that there are significant differences between different countries, depending on factors such as local laws, demand, inflation, and other variables. (2).

What factors are necessary to be involved in determining the minimum wage, according to the definition of the International Labour Organization and its Recommendation No. 135?

The first issue is the needs of workers and their families. The second issue is the general level of wages in a country, which is determined either at the regional or national level, or through contractual agreements. The third issue is the necessity of considering living expenses and potential changes in wages over time for the workforce. Here, factors such as inflation play a prominent role. In fact, this issue refers to taking into account the household basket of goods, considering inflation and expected inflation during the period of employment, which we are familiar with in Iran. The next issue, fourth, is the benefits of social security that workers must have access to. The fifth issue is the issue of living standards in relation to other social groups. This means that the workforce must have access to these minimum standards, just like other social groups. The sixth and final issue is the important issue of economic factors, such as the requirements for economic development, productivity levels, employment levels, and payment capacities in that economy.

As mentioned earlier, according to Article 41 of the Labor Law in the Islamic Republic of Iran, the minimum wage must be determined based on two important factors – inflation and cost of living. However, a comparison of the minimum wage in Iran and neighboring countries shows that we seem to be far behind in this regard. We know that the minimum wage in Iran in 1403 (2024-2025) with a 35% increase reaches a maximum of about $180 (with the dollar being 65,000 tomans, which is even higher at the time of writing this text). This is while the minimum wage in our neighboring country of Iraq, about 21 years after the occupation, is $260. This number in the Persian Gulf countries and specifically in Kuwait, Qatar, UAE, Oman and Saudi Arabia, are $327, $493, $408, $839 and $800 respectively. Turkey, our neighbor to the northwest, also has a monthly salary of about $560

Clear numbers. In this comparison, we did not go to European countries to say that Europe is there and here is the Middle East and West Asia; in Europe, the minimum income in January 2024 is 360 euros in North Macedonia and the maximum is in Luxembourg, at 2571 euros per month. (5) Our comparison has been made in West Asia and with our neighbors. But even in this comparison, you can see that there are significant differences even with the minimum in West Asia; not to mention that this equation should also include a high inflation rate of over 40% and the cost of the household basket. Labor activists had proposed a figure of around 351 dollars (equivalent to 65,000 tomans) and yet, it seems that the alliance of employers and the government has brought the situation to a point where the approved wage is not acceptable even to representatives of the labor community.

Definitions are specific and methods are determined in each country, based on its economic, social, and cultural characteristics. The minimum requirements and factors that must be considered in determining the minimum wage are also clear according to the definition of the International Labor Organization. However, the result of determining the minimum wage in Iran and comparing it with its neighbors in West Asia shows the suppression of labor wages and the spread of poverty among them. Workers who do not have the right to defend themselves and their independent organizations are suppressed and confronted with political excuses. If these organizations existed and were completely independent and capable, perhaps they would have been able to resist this wage suppression twice as much.

Whether it is a place where the minimum wage is provided through bargaining, or a place where governments or national or regional institutions determine this minimum, there is a determining factor for defending the rights of workers; a factor that generally acts as a result of the efforts of workers and in defense of their rights. This factor is labor unions. These are trade unions formed to defend the rights of their fellow workers and essentially act as a united front of the workforce against employers and established authorities. These labor unions have special power in democratic countries and can, to the best of their ability and according to their situation and conditions in those countries, engage in free bargaining with the authorities and employers. Because in these democratic countries, the rights of these unions are recognized and it is unlikely that these unions and groups will be faced with strange labels such as acting against national and social security, or conspiring against the security of the country; labels that are very familiar to activists of labor and trade unions in Iran. In fact,

The 1403 wage in Iran has caused many discussions. Labor organizations in Iran have risen up and demanded unity against what they call the “exploitative system”. International and domestic laws, regulations, recommendations, and definitions are all clear. The experiences of different countries in using various methods of determining wages are also available. However, what we see is the same suppression of wages that has happened in Iran, and it seems that the solution is the same as mentioned in the joint statement of some labor organizations, which they call the “only way”. It is nothing but “organized, purposeful, and planned struggle against the exploitative system.” This struggle, which has been going on for decades, will continue until the people achieve their national sovereignty and determine their own destiny.

Notes:

1- Najafi Kajabad, Qasem, A Look at Methods of Determining Minimum Wage and Their Implementation in Some Countries and Iran, Monthly Journal of Work and Society, Issue 137, November 1390.

2- Which countries pay the highest and lowest salaries in Europe?, Khabaronline, 26 Azar 1402.

3- Pember, Robert and Dupre, Mary Terz, Statistical Aspects of Determining Minimum Wage.

Website of the World Organization of Work.

June 1, 1997.

4- Comparison of the minimum monthly wage in Iran and regional countries/ Details, Arman-e Melli newspaper, 16 Bahman 1402.

5- Yanatama, what are the minimum wages in Europe in 2024?

Euro News.

February 5, 2024.

6- Iranian labor unions demanded unity against the “capitalist system”, Radio Farda, 1 Farvardin 1403.