TRIPARTITE COMMITTEE BEGINS NEGOTIATIONS

FOR 2016 MINIMUM WAGES

INTRODUCTION:
The national tripartite committee has the task of determining minimum wages in
the country. The committee which was set up by the labour Act 651, 2003
section 13 is to among other things advise government on employment and
labour related matters, consult with parties in the labour market on issues of
social and economic importance as well as promote employment and industrial
peace at the work place.
On the 9th of May, 2015 an agreement was reached in the communique signed
after the second national forum on the Single Spine Salary Pay Policy held in
Takoradi that social partners are to commence the determination of the National
Daily Minimum Wage and the public sector wage negotiations for 2016
beginning June 23rd, 2015 and conclude by September 30 th, 2015 to enable
Ministry of Finance to incorporate the outcome into the National Budget of
2016
The national tripartite committee has three main parties, namely the
government, represented by the Ministry of Employment and Labour Relations,
the employers, by Ghana Employers Association, with the Trade Union
Congress representing organized labour or employees.
ISSUES OF CONCERN:
1. Housing for workers
2. Base pay of the Single Spine Salary Structure
3. Tax thresholds in relation to the 2015 National Daily Minimum Wage

HOUSING FOR WORKERS:

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Information emanating from the office of the Moroccan embassy in Ghana

points to the fact a reputable construction company Addoha group of the
Kingdom of Morocco is set to partner the government of Ghana fulfils its
manifest promise of constructing ten thousand affordable housing units for the
people of Ghana. And that the company will open a cement factory in the
western region and also establish a bank (wafa Tijari) in Ghana.
One may ask, is this another STX initiative?
THE NATIONAL MINIMUM WAGE:
A minimum wage is the lowest daily or monthly remuneration that employers
may legally pay to workers. Equivalently, it is the price floor below which
workers may not sell their labour. Although minimum wage laws are in effect in
many jurisdictions, differences of opinion exist about the benefits and
drawbacks of a minimum wage. Supporters of the minimum wage say it
increases the standard of living of workers, reduces poverty, reduces inequality,
boosts morale and forces businesses to be more efficient. In contrast, opponents
of the minimum wage say it increases poverty, increases unemployment
(particularly among unskilled or inexperienced workers) and is damaging to
businesses.
It is a serious national evil that any class of employees should receive less than
a living wage in return for their utmost exertions.

Setting minimum wage:

Among the indicators that might be used to establish a minimum wage rate are
ones that minimize the loss of jobs while preserving international
competitiveness. Among these are general economic conditions as measured by
real and nominal gross domestic product, inflation, labor supply and demand,
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wage levels, distribution and differentials, employment terms, productivity

growth,

labor costs, business operating costs, the number and trend of

bankruptcies, standards of living and the prevailing average wage rate.

In the business sector, concerns include the expected increased cost of doing
business, threats to profitability, rising levels of unemployment and subsequent
higher government expenditure on welfare benefits raising tax rates, and the
possible knock-on effects to the wages of more experienced workers who might
already be earning slightly more. Labor leaders seek to win support by
demanding the highest possible rate. Other concerns include purchasing power,
inflation indexing and standardized working hours.

Effects of minimum wage:

An analysis of supply and demand implies that by mandating a price floor
above the equilibrium wage, minimum wage laws should cause unemployment.
This is because a greater number of people are willing to work at the higher
wage while a smaller number of jobs will be available at the higher wage.
Companies can be more selective in those whom they employ thus the least
skilled and least experienced will typically be excluded. An imposition or
increase of a minimum wage will generally only affect employment in the lowskill labor market, as the equilibrium wage is already at or below the minimum
wage, whereas in higher skill labor markets the equilibrium wage is too high for
a change in minimum wage to affect employment. According to the supply and
demand model increasing the minimum wage decreases the employment of
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minimum-wage workers.
If a higher minimum wage increases the wage rates of unskilled workers above
the level that would be established by market forces, the quantity of unskilled
workers employed will fall. The minimum wage will price the services of the
least productive workers out of the market. The direct results of minimum wage
legislation are clearly mixed. Some workers, most likely those previous wages
were closest to the minimum, will enjoy higher wages. The ripple effect shows
that when you increase the minimum wage the wages of all others will
consequently increase due the need for relativity. Others, particularly those with
the lowest prelegislation wage rates, will be unable to find work. They will be
pushed into the ranks of the unemployed or out of the labor force. It is also
argue that by increasing the minimum wage, however, the economy will be
adversely affected due to small businesses not being able to keep up with the
need to subsequently increase all workers wages.
A firm's cost is a function of the wage rate. It is assumed that the higher the
wage, the fewer hours an employer will demand of an employee. This is
because, as the wage rate rises, it becomes more expensive for firms to hire
workers and so firms hire fewer workers. This will lead increase unemployment
with the resultant low productivity.
The basic theory says that raising the minimum wage helps workers whose
wages are raised, and hurts people who are not hired (or lose their jobs) because
companies cut back on employment
The argument that a minimum wage decreases employment is based on a simple
supply and demand model of the labor market.
The negative employment effects of minimum wage laws are minimal if not
non-existent if the minimum wage is set close to the equilibrium point.
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Macro-economic concerns
Ideally the work of the national tripartite committee should not be too difficult
advising government and fixing minimum wages and salaries, but unfortunately
in an economy like Ghanas, where the macro-economic indicators are so harsh
it becomes a very difficult undertaking.
With inflation rate hovering around 16.8%, the currency depreciating very fast
against all the major currencies in the world i.e. $1 to 4.30, Unemployment
rate very high, especially skilled labour unemployment coupled with the recent
deregulation of petroleum products will lead to hike in transport fares and
subsequent increase in prices of goods and services, especially foodstuffs.
The cumulative effect of the above is that people are not able to buy the same
quantity of goods they bought previously, thus a reduction in their purchasing
power and negative impact on their incomes, and soon there are agitations for
wage increase by workers.
Agitations by workers, forces bodies like the Trade Union Congress and The
Employers Association to get Government to negotiate on increasing new salary
wage for workers, a situation which not handled well only compounds the
inflationary effects of the economy..
Reports have it that already the government payroll is 53% of total revenue
generated, a situation which is not acceptable and which the IMF wants to be
reduced to 35% to fall in line with the ECOWAS average. It is also believed the
payroll is bloated by a lot of ghost names creating imbalances in the wage bill
Conclusion and Recommendation
How the tripartite committee handles the wage issues will impact either
negatively or positively on the economy. Thus they should ensure any increase
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in wages is backed by productivity. They should support the government to

clean up the payroll and eliminate all the ghost names.
Government should do well to the address the unemployment situation to allow
or create the opportunity for more people to work, there by increasing economic
activity and productivity and ultimately increase in revenue in the form of tax
collection.
Reduce the tax exemptions as it current exists to enlarge the tax net and increase
revenue. Ensure the proper management of resources by reducing waste in the
economy.

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