Ghana Increases Salaries by 30 Percent Amid Economic Woes
Ghana’s government and unions have agreed to raise wages for all civil servants by 30% by 2023, they said in a joint statement, as the country struggles to reduce debt and fight rampant inflation.
Unions representing civil servants began negotiations with the government for a pay rise in November, after months of hardship sparked street protests that prompted the government to seek help from the International Monetary Fund.
On Thursday, the parties agreed to a 30% increase in base wages across all sectors, effective January 1, 2023.
The West African producer of gold, oil, and cocoa, once dubbed Africa’s shining star by the World Bank, is experiencing its worst economic crisis in a generation, with inflation at 50.3%, the highest in 21 years.
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The local cedi has fallen sharply against the US dollar over the past year as government spending cuts and central bank rate hikes have failed to contain inflation, which rose to a new high of 54% last month.
The government of Ghana announced drastic spending cuts in March, including cuts to ministerial salaries, in a bid to reduce the deficit, contain inflation, and slow the cedi’s slide.
However, it also increased the living allowance for public sector employees by 15% in July, citing the impact of “global challenges” on citizens.
In December, Ghana reached a team agreement with the International Monetary Fund for a three-year $3 billion support package. But it needs to restructure its debt to gain access to resources.
The government launched a domestic debt swap program last month and later said it would default on nearly $28.4 billion of its foreign debt.