Impacts of Implementation Minimum Salary in a Private Sector

What is private sector?

In economics, the private sector is the part of economy. This sector is run by a person, group or companies who are not controlled by a government for a profit making purposes.

What is minimum salary?

Its refers to the lowest remuneration that employers paid legally to their workers. Its can be paid hourly, daily, weekly, monthly and yearly.

What are Impacts Of Minimum Wages in Private Sector ?

The policy of minimum wages in Private Sector is manageable and unlikely to have a significant impacts on private sector. Although, some economics researcher stated that indirect effects of minimum wages in private sectors does not cause major issues especially for individual but, there have some impacts towards an organization and economics of the country. It slightly not effect of an individual which is private sector workers because they have allowances, overtime and bonuses for their workers.

Allowances

There is some incorporation allowances into a wage calculations for public sector workers such as transportation allowance, beverage allowance, medical allowance and outstation allowance which can softened the minimum wages.

Overtime

Most of public sectors encourage their worker to work extra hour to keep the company run smoothly, because public sector are mostly focusing in getting profit. By doing that, most of the workers will get a benefit from working extra hour and get extra salary.

Bonuses

Bonuses may be calculated in numerous ways. A bonus could constitute a percentage of hours billed, a percentage of sales, or a percentage of the company's profits for the year. the bonus is actually subject to many different forms of calculation, and some may be based on what the company can afford, how many years the employee has worked for a company, or on merit.

Beside that, some researcher stated that minimum wages in private sector will give an economics effect in the country.

Minimum wages in private sector will reduce poverty because it can fixed the wages of the lower income earners especially in rural areas. In some increasing in wages can make an impact on the standard of living of poor families, who can better afford on necessity goods.

Effect of a minimum wage increase will result in increases in the relative prices of goods produced. However, even if minimum wages were to lift prices, people will expect the inflationary impact to be manageable, the minimum wages is set at a relatively low level which will not raise the production costs and overall price level significantly.

Moreover, most of unskilled workers who usually depend on minimum wage job does not has the ability to demand for a certain level of income form their employers due to lack of experience and expertise. By having a minimum wages in private sector, it avoid employers or companies from taking advantages to the employee or workers.

It also can effect by changing the philosophies of the companies and organizations that are forced to adhere to it. It possible in the past to undercut competitors at the cheapest end of the worker market and run business through force of numbers. Minimum wage encourages businesses to concentrate on productivity of good workers.

In a nutshell, by minimizing wage in private sector is actually slightly does not effect of an individual but maybe it will effect the economics in the certain country based on their economics performance. Fixing the wage of workers actually have the pros and cons itself.

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