7 Countries with No Minimum Wage, from Nordics to Singapore

November 22, 2024 | 03:00 pm

TEMPO.CO, Jakarta - The minimum wage refers to the minimum remuneration an employer has to provide to employees for work performed within a specified period, as defined by the International Labour Organization (ILO). This system is in place to ensure that workers are paid a fair wage, and even to overcome poverty.

However, in several parts of the world, there is no legal minimum wage. Instead, these countries rely on alternative systems such as collective bargaining agreements.

So, where are the countries with no minimum wage? Citing Investopedia, wageindicator.org, and other sources, here’s an outlook of some nations that successfully function without a minimum wage.

1. Sweden

Of all the countries in the world without a minimum wage, Sweden is one of them. Instead, the country implements a Nordic model that requires each sector or industry to set the minimum remuneration through collective bargaining.

While there is no minimum wage regulation, employees in Sweden work only 40 hours per week. They also get 25 days of vacation with an additional 13 public holidays. Given the legislation, it is no surprise Sweden is among the best countries in the world in terms of quality of life.

2. Norway

Norway is known for its high standard of living and strong economy. This condition is supported by the existing legislation, which allows workers to benefit from high wages and a good number of days off.

The wage is agreed upon through union-negotiated processes and is set by the industry. In addition, the average annual income of most workers in Norway is US$55,780.

3. Iceland

Regarded as the safest country in Europe, Iceland's labor market also operates without a legal minimum wage. Since most workers in the country are part of trade unions, they can negotiate the base salaries of their respective industries.

4. Denmark

Similar to Iceland, union negotiations are largely responsible for determining the fair wage for workers in their respective jobs. However, the lack of a set minimum wage in Denmark has led to a less than harmonious relationship between employers and employees.

5. Finland

The Finnish labor market does not operate with a formal minimum wage. As explained by wageindicator.org, collective agreements are used to agree on a minimum wage. With this system, you can even negotiate for food and housing.

6. Switzerland

Switzerland is another country that does not have a minimum wage. Most wages in the country are set through collective and standard employment agreements between unions and employers' associations. Despite the lack of a legal minimum wage, Swiss workers are paid fairly and wages are relatively high compared to other countries.

7. Singapore

 The last country on our list is Singapore. The Southeast Asian country does not have an official minimum wage. As a result, wages are set by market forces, the cost of living, and collective bargaining agreements between employers and workers, according to Insglobal.

In addition, the country also follows the so-called Progressive Wage Model (PWM). According to the Ministry of Manpower, this model allows workers to increase their salaries through improved productivity and skill development.

From Sweden to Singapore, these countries do not implement a statutory minimum wage, preferring to use collective agreements to determine pay. 

Investopedia | wageindicator.org

Editor's Choice: Southeast Asian Countries with the Highest Salaries

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