Accra, Ghana//- Ghana 2022 Earnings Inequality in the Public Sector report released by the Ghana Statistical Service (GSS) has revealed that four (4) out of every five (5) public sector employees earn less than GH₵3,000.
The analysis presented in this maiden report is based on data from the Controller and Accountant General’s Department on December 2022 earnings of public sector employees.
The data used for this analysis according to the recently released report is data from the Integrated Personal Payroll Database (IPPD2).
It is not exhaustive of the entire employees of the Government as some institutions such as the Ghana Revenue Authority, Social Security, and the National Insurance Trust (SSNIT) pay their employees themselves while others such as the Ghana Police Service, Ghana Armed Forces, and some universities pay their employees out of subvention from the Controller and Accountant General Department.
The Government of Ghana employs about 688,0001 persons, with over one-third (34.8%) of the employees in the Ashanti (18.2%) and Greater Accra (16.5%) regions. The North East (1.4%) and Savannah regions (1.4%) hold only 2.8 percent of the total number of public sector employees, the report noted.
KEY FINDINGS
National Earnings Inequality
The average monthly net salary of public sector employees is GH₵2,594. The highest paid earner takes home GH₵33,855, which is close to 81 times as high as the net salary of the lowest paid worker (GH₵418).
The report also added that the top 10 percent of the employees with the highest net salaries earn 22 percent of the total net salary. Half of the employees earn only one-third of the total net salary.
The variations in amounts of allowances paid to public sector employees exacerbates earning inequalities as the Gini coefficient for gross earning (23.7) is higher than basic (20.0).
Although salary deductions slightly reduce earnings inequalities among public sector employees, with a net salary Gini coefficient of 22.8, regressive effect is minimal.
The Palma ratio is 0.82. This means that the top 10 percent earns 82 percent of the total earnings of the bottom 40 percent.
The average allowances are much higher for persons with higher net salary. The allowances of people with a basic salary of between GH₵5,000 and GH₵9,999 are more than 26 times larger than those of people with a net salary below GH₵1,000.
The statutory deductions are progressive as its share increases by higher income groups. However, the differences are relatively small, where those with a salary above GH₵10,000 have statutory deductions of on average 25.0 percent, whereas those with a salary between GH₵1,000 and GH₵2,999 pay 20.0 percent of their gross salary to statutory deductions.
Greater Accra has the highest average monthly net salary (GH₵3,142) with North East recording the lowest (GH₵2,212).
The difference between the average net salary of men and women is GH₵165. This means that the gender pay gap is 6.0 percent. Men have a higher average monthly net salary, of GH₵2,669, while women have an average of GH₵2,504.
The average monthly net salary of women is lower than that of men in all 16 regions. The difference is highest for employees in the Upper West region, with men earning on average GH₵348 more than women. This is a gender pay gap of 13 percent.
In the Central Region the difference between men and women is the least, with women earning GH₵124 less than men. This means the gender pay gap of 5.0 percent.
Basic salary, deductions, and allowances all increase with age and are highest for the age group 50 to 60 years. However, the rate of upward changes in earnings between ages 20 and 40 years is marginally steeper compared to increases after age 40 years.
The average monthly salary for employees older than 60 years (GH₵14,466) is much higher than that of any other age group, almost five (4.7) times the average of 51 to 60 years, the group with the next highest average.
For the age groups up to 41 to 50 years, the average monthly net salary increases by between GH₵300 and GH₵500 from one age group to the next, with an increase of around GH₵200 between 41 to 50 years and 51 to 60 years.
For women and men there is a very similar relation between age and the average monthly net salary, where the average steadily increases with age.
Average income steadily increases with age until age is above 60. Average income for males above 60 is more than four times that of those within the ages of 51 to 60. In the case of females, the difference between the two groups is more than five times.
The average monthly net salary is highest for employees who have been in their workplace for between 20 and 35 years.
Differences between Payrolls, Ministries, Departments and Agencies (MDAs)
The average salary of workers on the payroll with the highest average earnings (GH₵22,925) is more than 14 times the average salary of workers on the payroll at the bottom (GH₵1,619). The difference between the average salary of workers on payrolls with the highest average earnings (GH₵22,925) and the average of next set of employees on the payroll (GH₵13,062) is 1.8 times high.
The MDA with the highest average earnings (GH₵9,335) has its employees receiving salaries more than four times as high as the institution with the lowest average salaries (GH₵2,153). The difference between the average salary of workers in MDAs with the highest average earnings (GH₵9,335) and second highest average salary (GH₵5,768) is about 1.6 times.
Within-Group and Between-Group Inequality
The contribution of earnings inequality among employees on the same grade is very negligible (7%) relative to differences across the grades (93%).
The differences in earnings across income groups are more pronounced compared to variations within income groups The contribution of earnings inequality within MDAs (88.0%) is significantly higher than variations across MDAs (12.0%) Inequalities in net salaries of public sector employees are largely explained by the differences in salaries between persons in the same demographic group or location (region).
What Government Statistician says
The Government Statistician and Secondary Author of the report, Prof. Samuel Kobina Annim said: “Analysing basic, gross, and net salaries of almost 688,000 employees within the public sector in Ghana has offered a baseline information for various stakeholders to study and unravel the specific causes of earnings inequality among different groups.”
This is partly because of the resolve of the Government of Ghana to deploy a universal principle of equal pay for work of equal value, which restricts the scope of potential factors that will drive earnings inequality.
These maiden statistics on salaries of public sector employees in Ghana has depicted stark differences in earnings among employees and across Government Ministries, Departments and Agencies.
It should be noted that the overall inequality level that is found in this report is relatively low, with a Gini coefficient of 22.8 for the net salaries.
However, this is not surprising as this report deals with a relatively homogenous group as it only focusses on public sector employees, whose salaries follow a universal principle of equal pay for work of equal value.
The variations, as alluded to earlier, are attributable to (1) differences in salary levels across Government Ministries, Departments and Agencies based on negotiated and approved specialised skills needed for the deployment of the mandate of institutions, (2) grade (level of qualification at the time of entry and promotions) and (3) grade step (number of years at the grade).
The levels of earnings inequality presented in this report will potentially exacerbate existing disparities in social opportunities such as quality healthcare and education, engender discrimination and crime, and stifle national growth, poverty reduction, and development.
Insights from this report provide policymakers with an opportunity to relate the observed variations in earnings to productivity and the overall growth trajectory of Ghana’s economy. Also, Heads of Government Ministries, Departments, and Agencies can collaborate with the Ghana Statistical Service to generate institution-specific analysis on earnings inequality and relate that to their levels of productivity across different segments of their organisations. To download the report here.
