Private sector wages and poverty in Ghana: 1988-1998

Real wage rises for the unskilled are one mechanism by which poor people can obtain rises in their incomes and a reduction in their economic vulnerability. In this paper it is shown that over a period in Ghana when measured poverty declined, 1988 to 1992, real wages for the unskilled rose, by about 11 per cent. Over the 1990s evidence from the manufacturing sector suggests substantial falls in the real wages of the unskilled, some 23-26 per cent between 1992 and 1998. In the longer term such wages are lower than those of the mid 1980s and approximately one-third the level of the early 1970s. Even if poverty can be reduced in this context, any fall in poverty will omit one of the most vulnerable groups of the working population. There is evidence that high rates of inflation and low investment are two factors explaining these falls in real wages.