Companies that hire internationally broaden their talent pool and increase their ability to find the right worker for their needs. But going global also creates new challenges for HR, finance, and legal teams. These teams must stay up-to-date on labor law changes in international markets—or risk the fines and legal fees that come with non-compliance.
One easily overlooked foreign labor consideration is minimum wage. Read on to discover seven international economies that plan to make changes to their minimum salary requirements in 2021.
For the third consecutive year, Mexico is raising its national minimum wage in 2021. Monthly wages will increase by nearly 15%, from MXN 3,703 to MXN 4,257 (about $215).
Among 37 countries in the Organisation for Economic Co-Operation and Development (OECD), Mexico had the second-lowest minimum wage proportional to the average salary in 2018. Since then, President Andres Manuel Lopez Obrador has consistently raised the minimum wage to close Mexico’s income gap. The 2021 minimum wage hike follows similar raises in 2019 (16%) and 2020 (20%).
To protect workers against inflation, Turkey is raising its minimum wage in 2021. The country’s Minimum Wage Determination Commission boosts monthly net minimum pay to TL 2,826 (about $380) from TL 2,324—an increase of 21.56% from 2020.
Inflation in Turkey was just over 14% in November 2020. Increasing the minimum wage by seven percentage points above the inflation rate enables Turkey to “not let our workers be crushed by inflation,” according to the country’s family, labor, and social services minister.
The 2021 wage hike is the second in two years. Before 2020, the minimum wage in Turkey remained unchanged since 2002. The change affects approximately half of Turkey’s workforce—all who earn a monthly salary at or near the minimum wage.
Amidst the COVID-19 pandemic in 2020, Spain raised its minimum wage (SMI) to EUR 950 over 14 annual payments. At the end of the year, the country’s Council of Ministers announced it was indefinitely extending the new minimum wage until the government decides on a new rate for 2021. By extending the 2020 SMI wage increase, Spain provides a measure of confidence for workers navigating a job market ravaged by the COVID-19 pandemic.
Prime Minister Pedro Sanchez notes that his country raised the SMI by 29% since 2018, despite a relatively low inflation rate over the same period. The Prime Minister promised to raise the minimum wage to reach 60% of Spain’s average salary by the time his term ends in 2022.
Russia is raising its minimum wage to RUB 12,792 (about $174) per month in 2021. The new benchmark represents an increase of 5.5% from 2020.
The wage increase is part of Russia’s new formula for calculating its minimum wage. The country now sets base pay as 42% of the country’s median salary. Companies must prepare for annual wage increases for as long as Russia uses this formula.
In anticipation of projected inflation, Colombia is increasing its minimum wage by 3.5% in 2021. The national minimum will jump from COP 877,803 per month to COP 908,526 (approximately $260) per month.
The minimum wage in Colombia fluctuates every year. The country raised its minimum wage every year between 2017-19 but lowered it each of the three preceding years. Companies doing business must remain continuously vigilant to ensure they keep up with the annual changes.
Like in Colombia, the minimum wage in Ukraine changes yearly. In 2021, the country is raising its base monthly salary from UAH 4,961 to UAH 6,474 (about $231). Ukraine is raising its hourly minimum wage from UAH 28 to UAH 36.
Ukraine’s minimum wage has been on the rise every year since 2017. Other than 2013 and 2014, when the base monthly salary remained at UAH 1,218, the country has changed its minimum wage every year since 2001. The consistent variation indicates that companies should expect more wage changes in the future.
Belgium is divided into three provinces—Flanders, Wallonia, and Brussels—each of which sets its own minimum salaries. All three provinces are raising their wages in 2021.
Flanders is raising executive pay to a base level of EUR 69,638 ($84,419), while the minimum income for EU Blue Card applicants will be EUR 52,229 ($63,315). Locally hired staff under the age of 30 must receive a base salary of EUR 34,819 ($42,209). These raises constitute a 1.94% increase from 2020.
Both Wallonia and Brussels are increasing minimum salaries by 1.23%. For executives, the increase sets the base salary at EUR 72,399 ($87,766). EU Blue Card applicants are entitled to a minimum salary of EUR 56,112 ($68,022), while highly skilled permit applicants must earn at least EUR 43,395 ($52,606) annually.
Ensure Compliance with Every International Minimum Wage Change
Keeping track of changes to wage requirements in different countries demands continuous attention. Failing to keep up with new wage laws can result in fines, legal complications, or the denial of employee work authorization applications. Teams must also be aware of related local employment nuances, such as whether employers can count bonuses, benefits, or allowances toward minimum salary requirements.
For HR, legal, and finance professionals juggling ever-changing employment laws in multiple markets, turning to a global expansion expert simplifies international compliance. Velocity Global’s employment expertise in over 185 countries helps companies navigate hiring challenges everywhere across the globe. Reach out today to find out how our team can support yours.