ILO Report Urges Overhaul of Pacific Minimum Wage Systems to Tackle Inequality

To improve wage outcomes and protect workers’ livelihoods, the report calls on Pacific governments to develop comprehensive national wage policies aligned with broader employment and social protection goals.

A new report jointly released by the International Labour Organization (ILO) and Massey Business School underscores the urgent need for Pacific Island Countries to reform and modernise their minimum wage systems to combat working poverty, promote social justice, and bolster economic resilience in the face of growing climate and economic shocks.

Titled "Minimum Wage Systems and Wage-Setting Practices in the Pacific Island Countries," the report provides a comprehensive analysis of current wage-setting frameworks across the region, including insights from countries like Fiji, Samoa, Vanuatu, and Tuvalu. It reveals that although most Pacific nations have legal minimum wage provisions in place, the effectiveness of these systems is severely limited by enforcement weaknesses, data gaps, and insufficient collaboration among stakeholders.

“This publication represents both a diagnostic tool and a roadmap for reform,” said Martin Wandera, Director of the ILO Office for Pacific Island Countries. “In a region where informality is high and vulnerabilities to climate and economic shocks are intensifying, strengthening wage systems is about more than fairness—it’s about survival and inclusive development.”

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Key Findings: Enforcement, Data, and Dialogue Are Weak Links

The report identifies several systemic challenges facing Pacific wage-setting systems:

• Limited enforcement capacity within labour ministries hampers compliance

• Weak social dialogue between governments, trade unions, and employers’ organisations limits consensus-based reform

• Insufficient wage data undermines evidence-based policymaking and hinders routine wage reviews

• Informal workers, who make up a large share of the workforce, are often excluded from wage protections

The situation varies across the region, with Fiji and Samoa having more structured systems, while countries like Tuvalu and Vanuatu are still developing consistent wage-setting frameworks.

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Call to Action: Build National Wage Policies and Strengthen Institutions

To improve wage outcomes and protect workers’ livelihoods, the report calls on Pacific governments to develop comprehensive national wage policies aligned with broader employment and social protection goals. These should be supported by investments in:

• Institutional strengthening of labour ministries and wage boards

• Improved statistical systems for regular wage monitoring

• Clear enforcement mechanisms with capacity to sanction violations

“Many Pacific countries have taken important steps forward,” noted Professor James Arrowsmith of Massey Business School. “But until governments can ensure minimum wages are actually enforced and adjusted based on reliable data, workers will continue to fall behind the cost of living.”

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Emphasis on Equity: Reach Informal Workers and Women

One of the report’s key recommendations is to extend minimum wage coverage to informal workers, particularly women, who are disproportionately represented in low-paid, informal sectors such as agriculture, domestic work, and tourism.

Women often face multiple forms of disadvantage: lower pay, job insecurity, lack of legal protection, and limited access to unions or legal recourse. Addressing this gap is critical for achieving gender equity and advancing the Decent Work Agenda.

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Reinforcing Social Dialogue and International Standards

The report also highlights the need for stronger collaboration between governments, employer organisations, and trade unions, noting that sustained and structured dialogue is essential to ensure that wage reforms are fair, context-sensitive, and economically feasible.

Aligning national frameworks with international labour standards, particularly the ILO Minimum Wage-Fixing Convention, 1970 (No. 131), is also encouraged. Doing so will:

• Promote transparency and accountability in wage decisions

• Enhance regional cooperation and knowledge sharing

• Help Pacific nations meet their commitments under the Sustainable Development Goals (SDGs), especially SDG 1 (No Poverty) and SDG 8 (Decent Work and Economic Growth)

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The Bigger Picture: Minimum Wages as a Tool for Resilience

The report positions minimum wage reform not only as a labour issue, but as a strategic pillar of economic recovery and resilience in a region facing overlapping crises—climate change, post-pandemic disruptions, and rising inflation.

In countries where entire economies depend on vulnerable sectors like tourism and agriculture, a well-designed minimum wage system can stabilise household income, reduce inequality, and foster social cohesion.

“A fair minimum wage system isn’t just a policy—it’s a foundation for resilient and inclusive growth,” Wandera emphasized.