The urban labour market in Papua New Guinea, post-deregulation

Abstract

This paper documents the sequence of interventions followed by deregulation of Papua New Guinea?s urban labour market. Intervention began in 1972 and was mainly in the form of a heavily distorting minimum wage for unskilled workers. 1992 saw the dismantling of these minimum wage restrictions amidst fears of a dramatic deterioration of workers? conditions. A survey of private urban employers was undertaken in 1995 to determine the shape of the urban formal labour market. Given the opportunity for wholesale adjustments to nominal wages, there has been only minimal change. Nevertheless, real wage reductions have been substantial for both unskilled and skilled labour. The survey provides other insights into the characteristics of the formal labour market and this paper gives an overview and interpretation of these results. Show more