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02.02.2007 General News

Changes in minimum wage compared, NDC VRS NPP

By Suleiman Mustapha
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Changes in minimum wage compared, NDC VRS NPP Suleiman Mustapha , 02/02/2007 AS our table below indicates, between 1986 and 2007, the daily minimum wage in Ghana shot up from ¢90 to the latest rate of ¢19,000, representing a whopping 2,112 percentage rise.

Unfortunately, until the macro-economic stability of recent years, those increases only represented woefully unconvincing attempts by the previous government to reduce the rate of depletion of the purchasing power of the Ghanaian worker, which was under a constant barrage of fiscal assault from high inflation and currency depreciation.

Significantly, never once under the eight years of the National Democratic Congress did the official minimum wage exceed the one dollar mark, even though lowly paid workers were supposed to have 'enjoyed' an 813% increase on the minimum wage from ¢460 to ¢4,200 over the period.

However, the situation has seen a marked improvement in the last five years, especially. Since the New Patriotic Party took power in 2001, the minimum wage has risen by 353%. Essentially, for the first time in at least 25 years, that increase has overtaken the accumulative rise in the prices of consumer goods and services over the same period.

It is also instructive that since the NDC left office, the cedi has fallen by the relatively low figure of 34% against the benchmark currency, the US dollar.

The comparison is most revealing: in 1993, the minimum wage was ¢460, way below the dollar, with $1 exchanging for ¢649.06 and the rate of inflation over the year measuring at 27.7%. Over the next eight years under President Jerry John Rawlings the cedi depreciated by nearly 1000% (in fact 962%), well below the accumulative rise in the minimum wage (813%), which forever remained under $1.

With the minimum wage above $2, what it means is that if it can be adhered to by all employers in the country, then Ghana should rise significantly above the African statistics, which put the majority of the people below the $1 mark.

Meanwhile, Ranking Member on Economics and Finance Benjamin Kumbour has asked Government to explain the 18 percent upward adjustment in the country's minimum wage.

In an interview with The Statesman just after the announcement of the minimum, which, has been reviewed upward from ¢16,000 to ¢19,000, the MP for Lawra Nandom wondered whether the adjustment was in fulfillment of the 20% across board salary increase the government referred to in the 2007 budget statement.

According to him, Government must explain the net effect of the increase in terms of the take home pay of the ordinary worker.

Nonetheless, inflation ended the year 2006 at 10.5%, higher than the 18% push-up in the daily minimum wage, which for the first time in living memory is more than $2.

Dr Kumbuor said “if the 18% increase is what the government referred to as a 20% across board increase then it's short of the figure promised. If it is not, then [government] must fulfill its promise by increasing salaries by the 20% percent increase across the board.”

The Trades Union Congress has meanwhile in a news release accepted the new minimum wage and commended Government for its open door policy.

The increase follows agreement reached among members of the Tripartite Committee comprising Government and representatives of Ghana Employers Association and the Trades Union Congress, after several weeks of negotiation.

History of Ghana's Minimum Wage, Inflation, and Exchange Rates (1986-2007)

Year/Factor

Minimum Wage (¢)

Inflation (over 12 months) (%)

Exchange Rate ($)

1986

90

33.34

89.29

1987

112

34.18

147.06

1988

146

26.56

200.00

1989

170

30.46

270.27

1990

218

35.9

326.33

1991

460

10.26

367.83

1992

460

13.03

437.09

1993

460

27.7

649.06

1994

790

34.2

956.71

1995

1,200

70.8

1,446.12

1996

1,700

32.7

1,740.37

1997

2,000

20.8

2,250.00

1998

2,000

15.7

2,346.00

1999

2,900

13.8

3,500.69

2000

4,200

40.5

6,889.28

2001

5,500

21.3

7,255.23

2002

7,150

15.2

7,932.31

2003

9,200

23.6

8,697.49

2004

11,200

11.8

9,004.63

2005

13,500

14.8

9,072.22

2006

15,000

10.5

9,200

2007

19,000

9,200

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