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Labour Consultant Austin Gamey has cautioned that the government’s recent approval of a 10% salary increase for public sector workers could further fuel inflationary pressures and strain the economy.
His concerns follow the government’s decision to raise wages after negotiations between labour unions and President John Dramani Mahama, who personally intervened to finalise the agreement.
This marks the second salary adjustment in less than a year, following a 23% increase in 2024 aimed at cushioning workers against rising inflation and economic hardships. While the new increment has been welcomed by public sector employees, Gamey believes it could have unintended economic consequences.
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In an interview with Citi News, Gamey stressed that wage increases should ideally be linked to productivity, a standard Ghana has yet to fully implement.
“The issue is base pay; normally, it should be based on productivity, but we are yet to get there as a nation. We are so far not practicing the performance management system here in Ghana fully,” he noted.
According to him, while the private sector tends to respond better to performance-based pay adjustments, the public sector lags in this regard.
“For fairness, the 10% is about the best for now. I would have preferred something else,” he added.
Gamey also warned that even minor wage adjustments in the public sector could have broader economic implications. He explained that an increase as small as 1% could push Ghana into a higher inflationary bracket, affecting not just workers but the entire economy.
“I would have preferred it lower. Because even a 1% adjustment on the public sector wage takes us to another inflationary bracket, and that comes back to bite all of us, including them,” he stated.
Gamey’s remarks highlight the delicate balance between ensuring fair compensation for workers and maintaining macroeconomic stability. While the government aims to support workers amid economic challenges, critics argue that frequent wage hikes without corresponding productivity improvements could lead to increased inflation, currency depreciation, and higher costs of living.
As Ghana navigates its economic recovery, analysts continue to debate whether wage adjustments should prioritise immediate relief for workers or long-term economic sustainability.
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