Purposeful, Productive and Predictable Minimum Wage Systems: A Review of Strategic Options for EBMOs in ASEAN

Minimum wage setting systems are one of the most important long-term issues facing Employer and Business Member Organizations (EBMOs) in ASEAN. EBMOs and business members often complain that these systems lack evidence-based criteria and transparency in the wage setting process. Instead, they argue that political considerations are often of primary importance. Beyond political interference, minimum wage setting processes are facing a number of other challenges. In a few countries, successive large minimum wage increases have pushed minimum wages high both in comparison to other countries in the region, as well as to other measures of wages. This has affected businesses, who struggle to expand, comply with high wage levels, and make investment plans for the future. Compounding this are growing calls from union groups for a ‘living wages’, which has bred confusion as advocates often link this and minimum wages. Minimum wages setting is further complicated by recent and significant economic developments from the COVID-19 outbreak. For EBMOs, this confluence of challenges presents an opportune time to review minimum wage setting and propose reforms to ensure that these systems contribute to sustainable enterprises, employment growth, and decent outcomes for workers.