How Should We Rethink Minimum Wage for Sustainable Labor Markets? A Sectoral-Structural Framework for Developing Economies

Minimum wage policies remain a pivotal tool for labor market regulation, yet their effectiveness varies across developing economies due to structural heterogeneity and institutional differences. This conceptual paper employs a systematic literature review following the PRISMA framework to examine global minimum wage models, historical evolution, and their implications for sustainable labor markets. Using databases including Scopus, Web of Science, and Google Scholar, 87 relevant studies were selected and analyzed based on country context, policy type, and temporal trends. The findings highlight the evolution of minimum wage frameworks from early national legislation in industrialized nations to contemporary approaches such as multi-tier systems, regional differentiation, and the Progressive Wage Model in developing countries. Comparative analysis reveals that while national wage floors enhance equity, sector-specific models and skills-linked frameworks better address informal labor, underemployment, and economic sustainability. Minimum wage levels across selected developing economies (Malaysia, Indonesia, India, Vietnam, and others) demonstrate rising trends aligned with social equity objectives, yet disparities persist due to income classifications, regional cost-of-living differences, and labor market segmentation. This paper argues for a hybrid minimum wage policy that integrates competitive and monopsonistic labor market insights, linking wage floors with productivity, vocational training, and institutional capacity building. Such a framework not only improves wage adequacy but also promotes sustainable employment, social inclusion, and long-term economic resilience. The study provides policymakers and researchers with a structured conceptual basis for designing context-sensitive and sustainable minimum wage policies in developing economies.