Over the past two decades, Ghana's economy experienced an average annual growth rate of 5.8 percent, and became a low-middle income country in 2007. Though Ghana's average annual employment growth between 1993 and 2013 has been higher than sub-Saharan Africa's--3.7 percent versus 3.0 percent--its overall employment growth has not kept up with its economic growth. Notably, Ghana's impressive economic growth has largely stemmed from crude oil exports, mining, and financial intermediation--all sectors and subsectors in which labor absorption is low. Given these trends, Ghana's ability to transform its growth gains into better livelihoods for its citizens is being challenged.
In their paper, Understanding Ghana's growth success story and job creation challenges, Ernest Aryeetey and William Baah-Boateng examine the sustainability of the high growth Ghana has experienced over the last two decades and advise Ghanaian policymakers to rethink their growth strategy.
For a more in-depth look at these and related topics, such as labor productivity, you can read the full paper here.
Ghana's labor trends
Like in many other sub-Saharan African countries, the agriculture sector is the largest employer in Ghana, though its employment share is decreasing from 61.1 percent in 1984 to 44.7 percent in 2013. In addition, while industry's employment share has slightly grown from 13.7 percent to 14.6 percent over the same period (and the manufacturing subsector has decreased from 10.9 percent to 9.1 percent), services has grown from 25 percent to 40.9 percent--leading to what the authors refer as a "missing middle." As noted above, the authors emphasize that the sectors that have been driving Ghana's growth are not labor-intensive, namely mining, oil extraction, and finance. While labor has been moving from agriculture to services, the authors note that the trend "may not reflect a structural and productive transformation," largely because the jobs created in the services sector are mostly informal and have low productivity. Indeed, services sector maintained the lowest annual average growth of labor productivity between 1992 and 2013. As part of these shifts, informal employment--which represented 88 percent of Ghanaian employment in 2013--grew by 3.7 percent on average while formal employment grew by only 2.6 percent during this period.
Unemployment in Ghana remains low, at 5.2 percent, though has experienced significant swings from 2.8...