Anticipating new minimum wage

The negotiations by the National Tripartite committee have commenced, to determine the new 2025 Minimum Wage, and base pay (public sector salaries). The committee is represented by government, employers, and organised labour associations, and began negotiations this week.

But what impact could a revised minimum wage have, with January displaying a year-on-year inflation rate of 23.5%?

The 2024 national daily minimum wage in Ghana currently stands at GH¢18.15 per day.

Economists have produced varying findings regarding the effect of a higher minimum wage on employment, poverty reduction, and inflation.

While raising the minimum wage to match inflation can stimulate consumer spending, businesses may increase their prices, creating a cycle of rising prices.

Some believe that employers may reduce their hiring and hours, to combat increased labour costs, which could reduce employment opportunities.

The new wage can play a vital role in allowing workers to, essentially, afford more. This is pertinent considering that the general price level of goods and services has increased by 1.7% between December 2024 and January 2025, according to the Ghana Statistical Service’s most recent report.

The committee’s deliberations will have to consider that food items have shown a higher month-on-month inflation rate than non-food items, meaning affordability of essential commodities is currently compromised.

The enforcement and adequacy of the new wages will also have to be carefully monitored.

Ag. Spokesperson of the President, Felix Kwakye Ofosu claimed in a statement that these negotiations – to inform the 2025 financial year – are significantly behind schedule. The statement claimed that they were expected to have been completed by the end of April 2024 per the Public Financial Management (PFM) Act. Ofosu urged social partners to hasten in negotiations, so that the new minimum wage can inform the much-anticipated 2025 budget.