Low risk of inflation or economic destabilization     

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Rising inflation rates in emergent or developing economies could turn out to be limited because the wage increase would not concern people working for local production. Therefore, it should have very little impact on local prices. In any case, social and economic progress would be spread out over time (several years), naturally and more or less progressively depending on each country’s structure. The risk of losing industries is also minimal. Major chains would have no reason to suddenly leave Bangladesh, Ethiopia or Vietnam if wages would have increased elsewhere as well. It is also highly unlikely that labor-intensive industries would suddenly return to countries that have lost their manufacturing know-how and capacity.

The minimum wage wouldn’t make prices rise excessively in western commerce, because, on the one hand, they have to take into account consumers’ purchasing power, and on the other, they face fierce competition. In the clothing sector, more than 40% of clothing is currently sold at sale or discounted prices. The largest impact would be on the weekly pace of "fast fashion" collections, recurrent advertising campaigns, and the number and size of the mega-stores on the world’s most prestigious shopping streets. A minimum wage applied to only part of a country’s active population is a concept that has almost never been tried, so there are no representative examples.

So we can instead refer to the implementation of a minimum wage in France, which was agreed to at the Grenelle negotiations in 1968. It represented an overall rise of 35%: the minimum agricultural income grew by 55% and other wages saw their remuneration increase by 100% or more over the following months and years, yet the inflation rate stayed fairly stable until the 1973 oil crisis.

If one examines the more-recent case that China represents, even though we need to take dumping into account, we can observe that multiplying the average wage by 300% in less than 10 years did not generate a sudden rise in the price of the products exported and sold on the shelves of western retail chains.   

Francis JOURNOT -  "International Convention for a Global Minimum Wage" 


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