Minimum Wages in Sub-Saharan Africa: A Primer

Type Working Paper - The World Bank Research Observer
Title Minimum Wages in Sub-Saharan Africa: A Primer
Volume 32
Issue 1
Publication (Day/Month/Year) 2017
Page numbers 21-74
Although the sectors and fraction of workers covered are small given the low rates of
formality and urbanization in Sub-Saharan Africa (SSA), as the number of covered workers
grows wage regulation will become increasingly significant. We find that higher minimum
wage values are associated with higher GDP per capita. Importantly, however, we find that
the minimum wage relative to the mean wage is higher in low income countries than in lowerand
upper-middle income countries. Indeed, SSA as a whole reflects a bias towards a more
aggressive minimum wage policy compared to the rest of the world. There is limited research
on the employment effect of minimum wages in SSA, but the few findings are consistent with
the broad summary of global research. By and large, introducing and raising the minimum
wage has a small negative impact or no measurable negative impact. However, there is
significant variation around this average finding – the employment elasticities are not
constant nor linear. Where increases in a minimum wage are large and immediate, this can
result in employment losses, but more modest increases usually have very little observably
adverse effects and may have positive impacts on wages. The great variability in findings on
employment could be due partly to the great variation in the detail of the minimum wage
regimes and schedules country by country, but also by the variations in compliance. We find
that higher Kaitz indices are associated with higher levels of non-compliance. The release of
country-level earnings and employment data at regular intervals lies at the heart of a future
country-focused minimum wage research agenda for Africa.

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