Minimum Wages in Sub-Saharan Africa: A Primer
In Sub-Saharan Africa (SSA)most countries have adopted minimum wage regulation. Although the sectors and fraction of workers covered are small, given the low rates of formality and urbanization in SSA, (i) as the number of covered workers grows, wage regulation will become increasingly significant for the economy as a whole, (ii) there can be spill over effects on to uncovered sectors, and (iii) as we show in the paper, wage regulation is particularly aggressive in SSA. Thus, current experience with minimum wages in SSA is relevant for analysts and policy makers as we look forward to possible redesign of regulation in the future. Examining the variety of minimum wage frameworks in the region, it is clear that the typology of minimum wage schedules, as well as the levels at which these minima are set, varies considerably across countries in Africa. Higher minimum wage values are associated with higher GDP per capita. Importantly however, we find that minimum wages in low income countries are set at values, relative to the country mean wage, and higher than those in lower and upper-middle income countries in Africa. Indeed, SSA as a whole reflects a bias towards a more aggressive minimum wage policy compared to the rest of the world – with low income economies again driving this trend.