Dynamics of Wage Fixation in a Developing Economy: The Case of Papua New Guinea

Despite the enormous significance of wage as the most dominant form of remuneration for workers, there is paucity of literature examining particularly minimum wage determination in developing countries. The reasons are numerous, however in contrast with the developed countries, most of them do not have wage related issues of high employment, advanced regulatory employment system and, single dominant formal monetary system. What is although obvious is that the determination of minimum wage in developing countries is fraught with inherent contradictions and dilemmas influenced by labour surplus, wide differentials in skills, dominant informal sector, struggling formal economy and sometimes wages paid do not reflect productivity. These factors exist simultaneously, if not in complete defiance of the usual small formal labour market.