Scientect

Author: A. Amankwaa
Date: 7 August 2024

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Ghanaians must demand commitment from all political parties to implement a minimum wage of at least GH₵18.15 per hour.

Ghana currently implements a minimum wage of GH₵18.15 per day (i.e., about £1 per day). This is equivalent to a minimum monthly wage of about GH₵363 to GH₵399.3 (£20 – £22) if a person works full time.

Yet, a weekly grocery shopping for a single adult living in major cities in Ghana is about GH₵280 to GH₵700 (i.e.,  GH₵1120 to GH₵2800 per month), including food and essential supplies. An amount that far exceeds the current monthly allowance of almost 150,000 new graduates deployed under the National Service Scheme who receive GH₵715.57 per month (about £36 per month).

Besides groceries, the cost of rent, utility bills, and transportation in the cities and major towns can range between GH₵500-1500 per month, and many working people are living from paycheck to paycheck and on loans.

Although many jobs pay wages above the current minimum wage, this falls short of a genuine living wage. For example, it is reported that the net salary of the average nurse in Ghana ranges between GH₵2000-2500 per month. Many working people in Ghana cannot afford their essential needs or enjoy a comfortable family life due to the low wages, with many women experiencing period poverty.

It is really time for a change, and Ghanaians deserve better. Political parties must come up with policies committing to implement a genuine living wage for the average working Ghanaian.

What is a minimum wage and a living wage?

A minimum wage is a legally mandated lowest hourly/ daily amount that employers must pay their employees. Its purpose is to establish a baseline compensation level, ensuring workers receive fair remuneration sufficient to cover basic living costs and safeguarding against labour exploitation. The minimum wage serves as a means to minimize poverty and bridge the income gap between the rich and the average working person.

Factors considered by governments in setting the minimum wage include prices of goods/services over time, inflation, standard of living of the general population, economic growth, social equity, equilibrium wage rate, geographic differences, labour productivity and other demographic factors.

A living wage is the minimum remuneration that should be paid to workers to have a decent standard of living, being able to cater for decent accommodation, food, and fundamental necessities. As part of achieving the UN sustainable development goals (such as SDG 1, 5, 8, and 10), the UN Global Compact recommends that employers take relevant action to become living wage employers.

Generally, a minimum wage set at a genuine living wage can improve the overall standard of living of average workers as this provides them a means to afford their basic essential needs and increases in the cost of living.

The need for a genuine living wage

Previous estimates in 2019 showed that a genuine monthly living wage of a single adult in Ghana is about GH₵1,495. This value has doubled over the last 5 years to about GH₵3,000 per month. This translates to at least a minimum wage of GH₵18.15 per hour.

There are numerous benefits to implementing such a minimum wage policy:

Firstly, such a policy will move many individuals and families in Ghana out of poverty and debt (UN SDG1). This can also reduce the number of households requiring financial aid from the government.

Secondly, this economic incentive can reduce the unemployment rate in Ghana as young people are likely to take on casual jobs or low-skilled jobs. Advancing a living wage policy also has benefits in addressing issues with societal inequalities (UN SDG10) and gender inequality (UN SDG 8) as women are more affected by low wages than men.

Further, such an hourly minimum wage policy in Ghana (GH₵18.15 per hour) has the potential to drive productivity and efficiency as employees are more likely to be retained and deliver their best in the workplace. Employers are also likely to take innovative actions to maximise their output and cut waste of resources.

Finally, implementing a genuine living wage can significantly improve economic growth due to an increase in consumer spending.

In practice, implementation of the minimum wage of at least GH₵18.15 per hour will mean that the minimum monthly salary of a full-time security person, waiter/ waitress, cleaner, shop attendant, carer, call centre assistant, shopkeeper, househelper/ housekeeper, nanny, cashiers, and a National Service Person should be about GH₵2,904. Such a minimum wage will allow the average worker to take part-time work with a decent remuneration if necessary.

Overall, a minimum wage set at a genuine living wage rate should be made a statutory requirement of employers in both the public and private sectors to improve lives in Ghana.