Wage regulation refers to attempts by a government to regulate wages paid to citizens.
Minimum wage
Minimum wage regulation attempts to set an hourly, or other periodic monetary standard for pay at work. A recent example was the U.K.
National Minimum Wage Act 1998
The National Minimum Wage Act 1998 (c. 39) creates a minimum wage across the United Kingdom.. E McGaughey, ''A Casebook on Labour Law'' (Hart 2019) ch 6(1) From 1 April 2025, the minimum wage is £12.21 per hour for people aged 21 and over, £10. ...
. Germany is currently debating whether to introduce its own.
Collective bargaining
Collective agreements between
trade unions
A trade union (British English) or labor union (American English), often simply referred to as a union, is an organization of workers whose purpose is to maintain or improve the conditions of their employment, such as attaining better wages ...
and employers can regulate wages of workers according to the needs of the business.
Arbitration
Arbitration involves makes collective agreements between trade unions and employers legally binding and mediated through a state appointed judge or magistrate.
Economic labour theory
An economic analysis of the law holds very simply that any intervention in a contract between two parties creates an inefficient labour market. Wages kept artificially high, by imposing any administrative or monetary costs on employers distorts the labour market equilibrium. For a national economy in a globalised world, that means jobs will go overseas and the
unemployment rate
Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is the proportion of people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work d ...
rises. Major proponents of this sort of labour economics include Nobel Prize winner from the University of Chicago, Professor
Gary Becker
Gary Stanley Becker (; December 2, 1930 – May 3, 2014) was an American economist who received the 1992 Nobel Memorial Prize in Economic Sciences. He was a professor of economics and sociology at the University of Chicago, and was a leader of ...
.
Professor Becker keeps a blog with well-known academic and judge,
Richard Posner
Richard Allen Posner (; born January 11, 1939) is an American legal scholar and retired United States circuit judge who served on the U.S. Court of Appeals for the Seventh Circuit from 1981 to 2017. A senior lecturer at the University of Chicag ...
. Posner is a lawyer and economist, and wrote a book called ''Economic Analysis of Law''. His starting assumption is that unions are the cartelisation of the labour market. Both would agree, that if its aim is to improve the living standards of society, wage regulation defeats itself. Posner says, “Economics is not a theory about consciousness. Behaviour is rational when it conforms to the model of rational choice, whatever the state of mind of the chooser.”
So, any conscious attempt to improve working standards are impossible under this view.
See also
*
National Minimum Wage Act 1998
The National Minimum Wage Act 1998 (c. 39) creates a minimum wage across the United Kingdom.. E McGaughey, ''A Casebook on Labour Law'' (Hart 2019) ch 6(1) From 1 April 2025, the minimum wage is £12.21 per hour for people aged 21 and over, £10. ...
*''
Ex parte H.V. McKay'' (1907) 2 CAR 1,
Australian labour law
Australian labour law sets the rights of working people, the role of trade unions, and democracy at work, and the duties of employers, across the Commonwealth and in states. Under the ''Fair Work Act 2009'', the Fair Work Commission creates a na ...
case on the living wage
References
{{Law
Regulation
Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. Fo ...
Public economics
Regulation