Business News of Friday, 21 February 2003
Source:
New Minimum Wage: ?9,000
Government has announced a new minimum wage of ?9,000 ($1.03) effective 1st February, this year. The Trades Union Congress demanded ?10,000 but the government went ahead to announce the new wage at a press conference this afternoon.
The government says it took the decision because of lack of consensus by the Tripartite committee which has been meeting on the issue. The tripartite committee has held about six meetings since the announcement of about a 100 per cent increase in petroleum products, but has not been able to agree on a new wage.
Finance Minister, Yaw Osafo Maafo told a press conference that government will negotiate with employers to ensure graduated wages in line with its commitment to improve the living standards of the poor
Statement By Minister Of Finance On The Adjustment Of Wages And Salaries For Public Sector Workers And The Setting Of Minimum Wage
Government announces increases in the prices of petroleum products as a result of current economic conditions.The level of increases were the only way to avert a national catastrophe. The increases have, as anticipated, led to increases in transport fares and the prices of goods and services.
In his recent State of the Nation Address, His Excellency the President tasked me to work out wage and salary adjustments to cushion workers against the effects of the increases in petroleum products and the expected 12% increase in utility prices by the end of the first quarter of this year.
Government wishes to express its profound gratitude to the Labour Union, the Employers and all other Social partners for their continued support, understanding, cooperation and patience in the process of determining minimum wage up to now.
In working out the levels of increases we have to be mindful of His Excellency’s caution on the need to resist the temptation to trigger off a cycle that will lead to higher prices for goods and services and fuel inflation.
Indeed, much as we are committed to ensuring that workers receive wages and salaries substantial enough to make them more comfortable and responsible, we have been mindful of the plight of the growth of small and Medium Scale business enterprises. This is particularly necessary in the case of the Informal Agricultural and Industrial sectors which include enterprises in crop production and processing as well as wood processing where large increases in wages will have devastating effects.
One crucial point that Government wishes to make clear is that the increase in minimum wage being negotiated is not the salary increase that public sector workers are to receive. Indeed, negotiations have begun with the members of the FORUM comprising the Civil Servants Associations, the Ghana Registered Nurses Association, the Judicial Service Workers Association and the Ghana National Association of Teachers. Government will not relent in its efforts to improve the working conditions and salaries of its workers, but this has to be done in a combined effort together with such associations.
The National Minimum wage is the lowest anybody who employs people should pay his workers. In setting this wage, careful consideration is given to the business environment of all employers, whether Government, Private Formal Sector, Private Informal and in particular the SMEs. Studies have shown that most of these SMEs are not able to pay their workers the required minimum wage set in previous years. The result has always been that the desperate worker accepts anything the employer can offer. We must avoid such situations.
Wages and salaries of public sector workers are part of the revenue and expenditure calculations of Government. In simple terms, workers in the public sector are paid from funds generated from the domestic revenue mobilized by Government. Unfortunately revenue generate over the years have not been sufficient enough to support huge increase in wages and salaries without creating inbalances in the macroeconomic environment.
Indeed, taking all statutory payments together with wages and wage related expenditures as a percentage of total domestic revenue gives a value of 105 percent. This is an unhealthy situation which must change.
Unbudgeted expenditure by Government in favour of Personal Emoluments in 2002 amounted to about ?1,200 billion. This increase in the volume of expenditure helped to fuel inflation which began to rise from October through to December 2002 after a steady decline that started from April 2001.
It is clear therefore that any increases in wages and salaries that will put undue pressure on expenditure and cause it to outstrip revenue, would spark off inflation that will eventually erode the gain that may accompany an increase in wages. In addition, such increases could lead to reductions in the labour force in all sectors of employment to enable enterprises pay these high levels of increases but it is obvious that people will prefer to be employed than loose their jobs so that a few can be paid higher wages.
Under the circumstances therefore the most humane and economically prudent step is to address the situation of the people with very low incomes so as to make it possible for them to withstand the pressures of the recent increases in prices of certain commodities. Accordingly, Government’s position is as follows:
? The daily minimum wage should be ?9,000 with effect from February 2003.
? Government, in line with its commitment to raise the living standards of persons earning below the minimum wage will proceed with negotiations currently underway with its employees to determine appropriate levels of increases graduated in such a way as to achieve the objective of government
? There will be no increases in salaries and allowances of the President, the Vice President, Ministers of State, Deputy Ministers, Metropolitan, Municipal and District Chief Executives and Special Assistants.
? Other measures which will be announced later include reductions in fuel allocations to Government officials, review of procurement procedures and cost of construction to minimize waste.
The decision not to increase the salaries of persons in these categories is to demonstrate to the country government’s preparedness to take the lead in the national effort to share the cost of ensuring a better tomorrow.
Ladies and Gentlemen,
Much as the Government is sensitive to the plight of workers and would have wished to give in to demands for certain percentage rises in wages and salaries, the fact of the matter is that, these increases need to be situated in a macroeconomic framework.
Unfortunately, our economy as it currently exists, is incapable of handling these demands.
It is time to work harder than ever before, increase productivity and expand the revenue base of our country such that in the very near future, the national bowl will be big and resourceful enough to satisfy our individual and sectional demands for higher and more attractive increases in wages and salaries.
Thank you all. God Bless you.
