Although the latest 10% increment in the daily minimum wage and base pay has been described as highly insignificant, Economist, Prof. Gofred Alufar Bokpin believes the gesture by the President is welcoming.
The National Tripartite Committee on Thursday after negotiations with labour announced the new increase to help cushion workers and minimize their cost of living burden.
President John Mahama who was at the meeting with labour admitted the insignificance of the increase. He pleaded that labour should bear with the government, but then again promised that it would be further increased if the economy improved.
A careful analysis by The High Street Journal reveals that the rate cannot offset the cost of living burden occasioned by the inflation rate which currently stands at 23.5%. In real terms, the increase is just a drop in the ocean. When gauged against the dollar, the old minimum wage of GH¢18.15 was worth US$1.51 in January 2024.
Although the 10% raise has increased the wage to GH¢19.97, it is currently worth US$1.29 which is even lower than the previous wage. It is also still below the World Bank poverty line of US$2.15.
Amidst the agitations by a section of the public, the economist at the University of Ghana Business School maintained that the current state of the economy requires sacrifice and the tightening of the belt.
Speaking in an interview with The High Street Journal, Prof. Bokpin said the economy is still in the foundation stage under the new government considering how the economy has been run aground by the previous administration. In his view, the government has also shown leadership by cutting some “wasteful expenditures, and hence the citizens must also sacrifice.
With the state of the economy which is obvious for all to see, Prof. Bokpin says the government had a stronger bargaining power.
“Under the circumstances, we are still in the sacrificing mood. Remember that since we started tightening our belt, we have not gotten to the stage where we can relax. We are still laying the foundations. You cannot be enjoying at a time when you are laying foundations,” he indicated.
He added, “If you look at the approach to the negotiation, the government had a stronger bargaining power. They have demonstrated leadership by example, by cutting the number of ministers. With all of these things, it disarms organized labor.”
He therefore described the 10% increase in basic pay for public sector workers and the daily minimum wage as a “honeymoon pay increase” indicating that labour will demand more when the honeymoon days are over.
“This is a honeymoon pay increase. We will accept it like that. But when the honeymoon is over, the reality will come” he warned.
The 10% increment has been met with mixed reactions from the public. However, Prof. Bokpin believes that the increase is justified given the current circumstances.
