Two faces of pay rise coin

Business Daily Kenya: 

Economists describe a minimum wage as the lowest remuneration that employers may legally pay their workers. Once the Government prescribes the minimum wage, no employer can pay their workers below that wage.
There are a number of reasons why governments legislate minimum wages. The most important seems to be protection of workers from exploitation by employers.
It is appreciated that the lowest paid workers have little bargaining power, especially in companies where they are not unionised, and during times of high unemployment.
Companies ordinarily seek to keep wages as low as possible, as this is one of the most important cost items. Without an incentive to keep workers pay above minimum thresholds, it is likely that workers would be paid very poorly.
This is especially so in low skill sectors. Low salaries High unemployment rates also severely compromise the power of workers to negotiate reasonable pay. The result is likely to be companies paying their workers very low salaries.
Central Organisation of Trade Unions Secretary General Francis Atwoli is a big proponent of minimum wages. He told employers they should not be proud of paying their workers a slave wage.
Workers salaries are usually not adjusted in tandem with the cost of living. As such, workers lose purchasing power and become progressively worse off.
The minimum wage is, therefore, meant to assist workers in maintaining their purchasing power in the face of the rising cost of living that inflationary pressures exert on cost of basic items such as food.
Boosting morale Setting minimum wages is also critical for boosting morale of workers. As was clear during Labour Day when President Uhuru Kenyatta announced the increase in minimum wages by 18 per cent, workers see this as a critical aspect of their well-being.
Weighed down by the rising cost of living, the rise in the minimum wage lifts workers, and can add impetus to boost their productivity. Minimum wages increase the amount of money available to a worker to spend. As such minimum wages may result in a rise in consumer spending, thus giving the economy a boost.
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