Ghana’s wage bill consumes massive share of revenue, warns World Bank


 

Ghana’s public wage bill is putting significant pressure on the country’s finances, with the World Bank raising concerns about its impact on economic stability and growth.

A recent report on Ghana’s finances warns that spending on public sector wages, debt interest payments, and statutory transfers has reached unsustainable levels, leaving little room for critical investments in infrastructure and development.

A Troubling Trend in Public Spending

The World Bank’s analysis highlights a concerning pattern in Ghana’s fiscal management. Between 2010 and 2023, 70% of government spending went to just three areas: public sector wages, debt interest payments, and statutory transfers.

This has left minimal resources for capital investments in roads, schools, and hospitals—key drivers of long-term economic growth.

Data from Ghana’s Finance Ministry shows a disproportionate share of revenue consumed by employee compensation. On average, 36% of total revenue is spent on public sector wages.

In 2024, the government budgeted 63 billion Ghana Cedis for employee compensation, while total revenue and grants were projected at 174 billion Ghana Cedis—meaning more than a third of revenue is allocated to wages. That figure is expected to rise to 73 billion Ghana Cedis in 2025, further straining public finances.

Calls for Reform Grow Louder

The World Bank’s findings have intensified calls for reform. At the report’s launch, Engineer Benjamin Arthur, CEO of Ghana’s Fair Wages and Salaries Commission, pointed to systemic issues in public sector compensation.

He highlighted the fragmented nature of wage determination, which includes the Single Spine Pay Policy, Article 71 office holders, and state-owned enterprises operating under different pay structures.

“This is where Ghana faces its biggest challenge,” Arthur said. “We have multiple mechanisms for determining pay, each governed by different institutional arrangements and legal frameworks. This lack of cohesion makes it extremely difficult to manage the wage bill effectively.”

Arthur stressed the need to review labor laws and recruitment policies to ensure sustainability. “If we fail to address these structural issues, any measures to control the wage bill will be ineffective,” he warned.



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