Higher educated people see their incomes increase more often than lower educated employees, according to recent research. For the FNV trade union, this is yet another proof that the minimum wage needs to be raised quickly. According to the FNV, there is a lot of ignorance about the legal minimum wage, starting with its level.
On average, the legal minimum wage is estimated at almost 13 euros. In reality, it is even less than a tenner: 9.82 euros per hour. That makes the topic difficult to discuss, as experienced by the union in recent years. Bas Jacobs, Sijbren Cnossen Professor of Public Economics at Erasmus School of Economics, researched the minimum wage.
Negative consequences
According to Jacobs, it’s better to give targeted tax reductions than to increase the minimum wage in order to raise people's net income. He prefers to seek it in purchasing power improvement rather than in a wage increase. Jacobs points out the negative effect of an increase in the minimum wage. Work will become more expensive and employers are likely to employ fewer people. On balance, the employee at the bottom pays the price in the form of more unemployment. You’re making the people you want to help unemployed, says Jacobs.
Compensating
Jacobs doesn't think that a higher minimum wage is necessarily wrong. When it comes to increasing the net income of low-income earners, it's better to reduce the tax burden. The costs will remain the same, but no jobs will be lost. The minimum wage can also be intended to prevent exploitation by companies. Employee income growth has been stagnating for years. The market power of companies may have increased as a result of more monopoly formation. A minimum wage protects workers from companies with too much power, says Jacobs.
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Read the entire article on AD, 20 November 2019 (in Dutch).
Also read the previous item, from 16 April 2019.