Chapter 4


Within the macro-meso-micro economic framework presented in figure 4.1, a reduction of
public sector employment and wages has direct effects on the two elements labour market
and household income. In general, it leads to an overall reduction of household income and,
in consequence, of aggregate food demand, hence to a left-downward shift of the aggregate
demand curve and an increase of the aggregate demand deficit (see par. 3 of Annex 1). What
are the implications for the food security situation?

In order to arrive at definite conclusions as to the impact on food security, the specific
programme design and the particular circumstances of each individual country need to be
taken into account. Generally it can be assumed that the effects of a wage cut are less severe
than a reduction in public sector employment. In most countries, government workers are
relatively well-off, and in spite of a wage cut they will remain well above the poverty line.
There are, however, exceptions, for example, Uganda, where public sector wage levels have
been so low that many urban civil servants were dependent on support from their rural
relations. Such conditions are usually taken into account when adjustment programmes are
designed.

Table 4.11 presents wage-related conditions of adjustment programmes in various African
countries and the index of real minimum wages. In all but three countries, real minimum
wages have fallen, in the case of Tanzania, by almost two thirds in six years.

 Table 4.11: Adjustment Programmes and Trends in Real Minimum Wages in Africa
 (selected countries), 1980 1986

 Type of wage-
 Country specific Index of real minimum wages
 conditionality (1980 = 100)
 ofadjustment*) 1981 1982 1983 1984 1985 1986
 C6te d'Ivoire a+b 92 94 89 85 84 79
 Ghana a+b 105 86 80 80 133 150
 Guinea a 91 87 79 71 64
 Kenya a+b 89 89 81 72 71 75
 Liberia a+b 93 88 85 84 85 83
 Madagascar b 90 81 68 68 65 64
 Malawi a+b 139 147 129 108 128 109
 Niger a+b 87 78 80 74 75 77
 Senegal a+b 99 91 94 84 78 74
 Tanzania a+b 99 77 61 60 45 36
 Togo a 84 83 76 78 80 77
 Zaire a+b 76 64 91 163 164 112
 Zambia a+b 88 93 88 81 75

 *) Wage-specific conditionalities included:

 a: freezing, reduction or postponement of wage increases in the public sector;
 b: wage restraint or wage policy reforms in sectors other than the public sector.

 Sources: IMF and World Bank data, cited in FAO, Committe on World Food Security, "Effects of Stabilization
 and Structural Adjustment Programmes on Food Security, Feb. 1989


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