The minimum wage is the legally established wage for the rate fulfilled by the employee. This is the level below which employees are not allowed to sell their work. The level of wages directly affects the development of the economy in the country. The government’s calculations show that the increase in the minimum wage will increase tax revenues, stimulate consumer demand for products and de-shadow the wage bill.
Increasing the minimum wage by the government is a way to increase tax revenues to the state budget. The higher the minimum wage, the higher the taxes. The increase in taxes will cover the Pension Fund’s deficit, if not wholly, then at least partially (Lopresti & Mumford, 2016). Another advantage of increasing the national minimum wage is the de-shadowing of the salary fund. One of the most acute problems of the modern economy, including the labor market, is the shadow wage. The high tax burden does not encourage businesses to work fairly, and employers hire employees illegally. Concealment of income makes it impossible to raise social standards and at the same time serves as an influential destabilizing factor (Lopresti & Mumford, 2016). In addition, raising the national minimum wage will change the entire tariff grid. At the same time, the parliament will stimulate the domestic market, as it increases domestic consumption by raising the minimum wage. Also, higher wages promote economic development by increasing population consumption and bringing the wage to an absolute subsistence level.
Thus, the minimum wage is the lowest wage that employers can legally pay their employees. Increasing the national minimum wage is a way to enrich the state budget through tax increases. Another advantage is the de-shadowing of the salary fund through legalized employment. In addition, a larger minimum wage will increase demand for national products, which will lead to economic development.
References
Lopresti, J. W., & Mumford, K. J. (2016). Who benefits from a minimum wage increase?ILR Review, 69(5), 1171–1190.