It is critical that the adjustment process offset any excessive rigidity with an appropriate dose of discretion.
One of the main challenges across countries is that, in some cases, the frequency and level of adjustments to the minimum wage depend on the discretion of bureaucrats and policymakers. Ideally, countries would aspire to a system where the adjustment of the minimum wage is automatic – at a predetermined date, systematically, the minimum wage is adjusted according to a reliable model. The problem with this system, however, is that it can create excessive rigidity. In the case of a recession, for
instance, increasing the minimum wage based on outdated information (data are typically published with some delay) can lead to extensive job losses.