5 Developed Countries Without a Minimum Wage

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As of 2024, employers subject to the Fair Labor Standards Act in the United States must pay the federal minimum wage of $7.25 per hour. State minimum wage can vary and is often higher than the federal minimum wage. As of Jan. 1, 2024, 22 states raised their minimum wage, six of them to $15 per hour or more.

While a minimum is set in the U.S., critics often say that any minimum wage discourages businesses from hiring more employees who should be compensated based only on the free market. Five developed nations outside the United States do not have a set minimum wage.

Key Takeaways

• Most developed countries with no legal minimum wage still have wage minimums set by industry through collective bargaining contracts.
• Countries with robust union memberships include Sweden, Iceland, Norway, and Denmark.
• Under the Fair Labor Standards Act, the first U.S. minimum wage rate was $0.25 per hour in 1938.

1. Sweden

Sweden operates without a nationally implemented minimum wage. However, the nation uses a Nordic model where minimum wages are set by sector or industry through collective bargaining using the krona.

Nearly all Swedish citizens belong to one of about 110 trade unions and employers' organizations that negotiate wage rates for regular hourly work, salaries, and overtime. Swedish law limits the workweek to 40 hours, just like in the U.S. However, it also dictates that all workers are entitled to 25 vacation days and 13 additional public holidays.

2. Denmark

Relations between workers and employers in Denmark have been deemed downright harmonious due to the lack of a federally mandated minimum wage. Trade unions negotiate for workers to be paid a reasonable rate.

Some types of work dictate the amount the worker must be paid per hour. In other areas, the pay may consist of a piece-work rate, performance-related pay, or a similar arrangement.

3. Iceland

Iceland consistently ranks among the happiest countries because of its low crime rates, high wages, and healthy populace. Employees in Iceland are almost all members of trade unions, which are responsible for negotiating baseline salaries for the industries they represent.

4. Norway

Norway is another northern nation that has eschewed a federally mandated minimum wage in favor of having union-negotiated wages set by industry. Norwegians enjoy good job security, strong wages, and ample vacation time.

Basic hourly wages vary by industry, age, and experience. Most Norwegians have job contracts and a fixed monthly income. Unskilled laborers often have a fixed income per hour.

Norwegian workers earn $55,780 per year on average.

5. Switzerland

Although there is no national minimum wage, Swiss wages are high relative to other nations. Some sectors use minimum wages negotiated between unions and employers' associations defined in the collective and standard employment agreements.

Employees that work in a sector with a minimum wage cannot be paid lower than the minimum wage indicated in the collective and standard employment agreements for that sector.

How Do Unions Influence Wages in Countries Outside the U.S.?

Most developed countries with no legal minimum wage still have minimum wages set by industry through collective bargaining contracts. The majority of their working populations are unionized. These unions negotiate a fair baseline pay rate for the participating workers.

What Is a Common Argument Against a Minimum Wage?

Some argue that developed nations without minimum wages have drastically lower unemployment rates. Proponents of repealing the minimum wage in the U.S. believe that countries that abolish baseline salary requirements have encouraged companies to increase hiring.

When Was the Minimum Wage Requirement Established in the United States?

Under the Fair Labor Standards Act, the first U.S. minimum wage rate was $.25 per hour in 1938.

The Bottom Line

As of 2024, employers subject to the Fair Labor Standards Act in the United States must pay the current Federal minimum wage of $7.25 per hour. Five developed nations, including Norway and Switzerland, do not have a national minimum wage rate but negotiate salaries by sector or through unions.

1. U.S. Department of Labor. "Minimum Wage."
2. Economic Policy Institute. "Twenty-Two States Will Increase Their Minimum Wages on January 1, Raising Pay For Nearly 10 Million Workers."
3. L&E Global. "10. Trade Unions and Employers Associations."
4. Government Offices Of Sweden. "Working Hours Act (1982:673)," Page 2.
5. Nordic Co-Operation. "Public Holidays in Sweden."
6. Unionen. "Annual Vacation."
7. Workplace Denmark. "Working Conditions."
8. Play Iceland. "12 Reasons Icelanders Are So Happy!"
9. Nordic Co-Operation. "Unions in Iceland."
10. Arbeidstilsynet. "Minimum Wage."
11. Arbeidstilsynet. "Minimum Wage."
12. Organisation for Economic Co-operation and Development. "Norway."
13. Confederation Suisse. "Salaries in Switzerland."
14. U.S. Department of Labor. "History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938 - 2009."

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