Ghana-Income and Wages

During the 1980s, per capita income rose slightly but was overshadowed by the increased cost of living. Per capita income climbed from the decade low of US$340 in 1983 to US$400 by 1988 because of the devaluation of the cedi and rising producer prices. The same factors, however, worked to increase consumer prices fourfold from 1985 to 1988. This trend continued throughout the early 1990s as consumer prices rose from 393.2 in 1990 to 634.7 in 1993 based on a 1985 price index of 100.

Real wages and salaries are estimated to have fallen by an enormous 83 percent between 1975 and 1983 and to have continued to fall through 1989, forcing many workers to seek additional sources of income. The level of real wages reached in 1988 was less than half that attained in the mid-1970s; nevertheless, the government was committed under the ERP to holding down inflation and hence, wages. In the 1990 budget, the government linked pay increases to productivity, inflation, and companies' ability to pay. With some exceptions, notably a one-time allowance for civil servants to compensate for increased fuel and transport costs in 1990, publicsector wages increased roughly in line with projected inflation in 1989, 1990, and 1991; however, in 1992, the government, which had scheduled elections late in the year, granted a salary increase to public-sector workers. Although no recent data were available for the private sector, wage increases under collective bargaining arrangements appeared to have been relatively modest.

Although increases in the minimum daily wage under the PNDC appear spectacular, they are linked to the steady devaluation of the cedi and have not overcome a constant erosion of worker purchasing power. Beginning in April 1984, the government increased the minimum daily wage to ¢35, then to ¢70 in January 1985, ¢90 in January 1986, and ¢122 in 1987. In March 1990, the minimum wage was raised to ¢218, and by August 1991, it had risen to ¢460, an increase of 111 percent as agreed to by the government, the Trade Union Congress, and the Ghana Employers Association.

In the face of popular elections and increasing strikes, the government agreed to massive pay raises at the end of 1992, including a 70 percent increase for nurses. Overall, civil service pay raises added more than ¢50 billion to the wage bill, reaching ¢175 billion in 1992, or 50 percent of government revenue. At the same time, the government moved to contain the wage bill by freezing staff recruitment in public-sector organizations as well as state salaries that exceeded those in the civil service.

Data as of November 1994