Ghana’s minimum wage is to be reviewed imminently in the wake of a significant increase in the cost of living.

The increased minimum wage is expected to be announced by Finance Minister, Yaw Osafo-Maafo (MP) as part of the 2003 budget statement, likely to be read in mid-February.

However, government is yet to decide on precisely how much to increase the minimum wage, although speculations are that, it will go up by a meager 20 per cent in view of the almost a hundred per cent increase in prices of petroleum.

According to a Business and Financial Times report, the Minister for Employment and Manpower Development is contemplating increasing the basic minimum wage to ?12,500 a day up 85 per cent from the current ?7,150.
“But our source admits that no final decision on the increase has yet been taken and it is yet to be presented before the tripartite committee for discussion. Indeed, the Cabinet itself is still to debate this issue later this month.”
Assistant presidential spokesman, Amponsah Bediako confirmed that the size of the proposed minimum wage hike is still undetermined and might eventually be lower than the 85 per cent being suggested within government circles.

The decision to raise the minimum wage is an intermediate measure aimed at cushioning workers, especially low income earners, against the inevitable significant rise of the new petrol process and another hike in electricity and water tariffs, scheduled for March.

So far, the Trades Union Congress (TUC) has not been part of the minimum wage review process. The TUC’s Secretary General, Kwasi Adu-Amankwah said the labour was awaiting government to come out with the new prices for fuel before it makes proposals for a corresponding adjustment on wages and salaries.

Mr. Adu-Amankwa concedes that the poor state of the national economy and productivity re important considerations in determining what the national minimum wage should be.

He however, stresses that working families deserve a floor below which they should not fall as far as incomes are concerned. The TUC boss wants the informal sector to implement whatever minimum wage is eventually negotiated, diligently as the formal sector.

The TUC is also pushing the argument that as companies try to adjust to the “price shocks” for energy, strong consumer demand is needed to see them through. Higher wages would enable demand to stay up despite higher living and production costs.

However, government will have to tread carefully in increasing its wage bills so as not to run into conflict with the conditions otherwise they derail Ghana’s likelihood of moving from decision point to completion point under the Highly Indebted Poor Countries initiative.

Indeed, expansion of revenues through higher tax and tariffs revenues is expected to be a major thrust of the 2003 budget.

NEW WAGES NEXT WEEK: To cushion workers against new fuel prices

Daily Graphic (21-01-2003) -- THE Government will announce increases in minimum wages and salaries for workers next week to help them cope with the upward adjustment in fuel prices and transportation fares. The Minister of Energy, Mr Albert Kan-Dapaah, who said this in an interview in Accra yesterday, however, did not disclose the percentage increase but stated that it will be significant enough to alleviate the suffering of workers.

He said a tripartite meeting of government representatives, trade unions and employers' associations will be held this week to arrive at an acceptable figure.

On the expression of outrage and rejection of the new fuel price increases by the National Democratic Congress (NDC) Minority in Parliament, he asked the group to come up with strategies on how to liquidate the ever-mounting debt of the Tema Oil Refinery (TOR), rather than make general and unfounded accusations.

A statement issued by the Minority described the increases in the price of petroleum products as the most unprecedented in the colonial and post-independence history of the country.Mr Kan-Dapaah refuted the Minority's claims and said it is rather the NDC Government that set that record.For instance, he explained that the PNDC within nine months in 1990 increased fuel prices by 180 per cent and in 1999 the NDC also increased the prices by 100 per cent.He, therefore, argued that "the almost 100 per cent increase by the NPP government in two years deserves every praise and not condemnation".

Reacting to the Minority's assertion that not even during the Gulf War in 1991 when crude oil prices rose from $10 a barrel to $40 a barrel were fuel prices increased to such levels he said, "What they should have added for Ghanaians to appreciate was that the exchange rate was ?360 to the dollar and that at the time of leaving office, the same cedi was ?7,050". The minister denied the Minority's claims that the new prices have no relationship with the previously announced petroleum price-fixing formula or the TOR debt.

The records, he said, are there for all to see, since it was the NDC government that designed the petroleum price-fixing formula and that the present government will very much appreciate it if the opposition comes out with specific deviations instead of hiding behind generalities.

He was emphatic that the petroleum price increases have no hidden VAT adjustment and challenged the NDC to demonstrate where the hidden figures are.Mr Kan-Dapaah said the government does not allow itself to be pressurised by its development partners but certainly does not disregard genuine advice offered it.

He stressed that "the medicine we are providing is our own prescription and not by some hidden hands".

He added that the price build-up has been published in line with the NPP government's transparency policy.

He said further that it is true there is a projected increase of ?170 per litre as escrow account intended to be added to the road development fund, pending approval by Parliament.The increase in the road development fund, he explained, is to enable the government to mobilise the counterpart funding which is crucial to support external loans and grants contracted for road construction in the country.

On the NDC’s accusation that it is obvious that the government has padded the petroleum prices and is using it as a tool for revenue generation, he stated that obviously when the import parity price goes up, the 15 per cent ad-valorem tax will generate more revenue.

He noted that “the 15 per cent is not a new creation of the NPP, since it was inherited from the NDC”. He admitted that the increases in petroleum prices will have a ripple effect on the economy, but challenged the opposition to tell Ghanaians of the effects of government inaction.