Why is minimum wage legislation adopted by the government.

1.	Why is minimum wage legislation adopted by the government.
Answer» Solution :Government fixes minimum wages of labour above the equilibrium RATE of wages which is determined by the free interaction between demand and supply forces. It is done with a view to PROTECT the interest of labour, since they do not have strong bargaining power. Therefore, government fixes minimum wage rate at a LEVEL higher than equilibrium level of wage rate. Minimum wage legislation is undertaken to ensure that wages paid to WORKERS do not FALL beyond a certain level. Hence in the labour market, a floor is set on wages i.e., wages are not allowed to fall beyond a certain level.

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