Minimum Wage in Cape Verde: The economic outlook and labour challenges in 2025

The minimum wage in Cape Verde is an essential element for the country's economic and social stability. As of January 2025, the minimum monthly wage has been set at 17.000$00This is a significant increase on previous years. This update reflects a dynamic salary policy adapted to the economic and social conditions of the archipelago.

In this article, we explore the historical evolution of the minimum wage, the factors that influence its definition, the challenges of the labour market and the future prospects for workers and employers in Cape Verde.

Historical evolution:

The Cape Verdean minimum wage has seen progressive increases over the years, in line with economic developments and workers' needs:

• 2014: 11.000$00
• 2018: 13.000$00
• 2024: 13.000$00
• 2025: 17.000$00 (increase of 54.5%)

This growth reflects the authorities' efforts to improve workers' living conditions, guaranteeing a balance between fair pay and the sustainability of companies.

The economic context:

he definition of the minimum wage in Cape Verde is directly linked to various economic factors, including:

• Gross Domestic Product (GDP): The country's economic growth influences the ability to review salaries.
• Inflation indicesThe cost of living and price variations have an impact on the need to adjust the minimum wage.
• Labour market: The unemployment rate and the structure of formal and informal employment are determining factors for wage decisions.

The Cape Verdean government endeavours to strike a balance between:

• Guarantee fair wages for workers.
• Maintaining the country's economic competitiveness and attractiveness to investors.
• Preserving employment levels and avoiding negative impacts on employability.

Regulations and labour rights:

The minimum wage is regulated by the Cape Verde Labour Codewhich follows the guidelines of the International Labour Organisation (ILO). This legal framework aims to:

• Ensuring fair labour practices.
• Defining the rights and duties of employers and workers.
• Protecting workers from wage exploitation.

In addition, compliance with these rules is essential to avoid inequalities in the labour market and guarantee the formalisation of labour relations.

The challenges of the labour market in Cape Verde:

Despite the increase in the minimum wage, Cape Verde faces structural challenges in the labour market, such as:

• High unemployment ratesespecially among young people.
• Predominance of the informal sectorThis makes it difficult to apply wage policies effectively.
• Low levels of professional qualificationThis is a problem that limits the growth of higher value-added sectors.

To mitigate these difficulties, the government has promoted strategic initiatives.

Government policies and strategies:

The increase in the minimum wage is part of a wider set of policies to improve the labour market and the economy. Some measures include:

• Promoting formal employmentencouraging regular hiring and compliance with labour standards.
• Strengthening vocational trainingby preparing workers for strategic sectors of the economy.
• Stimulating entrepreneurshipcreating conditions for the development of sustainable businesses.

These strategies are aimed at creating a more favourable environment for economic growth and improving people's quality of life.

The expected impacts of the wage increase:

Updating the minimum wage can have both positive and challenging impacts on the Cape Verdean economy:

Benefits:

• Increased purchasing power: workers will be able to consume more, boosting the domestic market.
• Poverty reduction: improving incomes can help reduce social inequalities.
• Stimulating the economy: the business sector can benefit from higher consumption, boosting growth.

Challenges:

• Corporate sustainability: small businessesome businesses may find it difficult to meet wage costs, affecting their sustainability.
• Risk of rising unemployment: incompanies with less financial capacity may reduce hiring or turn to the informal sector.

The key to the success of this measure will be continuous monitoring and complementary policies to support companies and workers.

Future prospects for the minimum wage in Cape Verde

In the coming years, the minimum wage is expected to continue to evolve in line with the country's economic and social trends.

The government and Cape Verde's social partners signed the second Strategic Consultation Agreement, which provides for an increase in the minimum wage to 20,000$00 (181 euros) in 2027, representing an increase of 81% since its creation in 2013.

However, the government and the social partners should:

• Monitoring the impact of wage increases on the economy.
• Adjusting employment and training policies to ensure a more qualified labour market.
• Create incentives for business growth and the creation of new jobs.

Conclusion:

Raising the minimum wage to 17,000$00 in 2025 represents a significant step towards improving labour conditions in Cape Verde. However, the success of this measure will depend on careful implementation, effective complementary policies and continuous dialogue between the government, companies and workers.

Ensuring sustainable economic growth and a fair labour environment will be essential to consolidate the benefits of this wage update and promote inclusive development in the country.

Sources:

https://www.governo.cv/ajuste-salario-minimo-2025/

https://www.rtp.pt/noticias/economia/salario-minimo-em-cabo-verde-podera-aumentar-81-em-14-anos_n1548642