Ghana’s Finance Minister, Cassiel Ato Forson, has warned that the Ghana wage bill has reached unsustainable levels, placing immense pressure on the country’s finances and forcing government to resort to borrowing to meet salary obligations.
Speaking at the Presidential Dialogue with Organised Labour, the Minister described labour-related expenditure as one of the most significant threats to economic stability.
“Labour-related fiscal pressures remain one of the most significant challenges facing our economy… It has the propensity to derail Ghana’s economic progress.” - Finance Minister, Cassiel Ato Forson
Wage bill crowding out development spending
Dr Forson revealed that compensation for public sector workers now accounts for 39 percent of total government expenditure, far exceeding allocations for other critical areas.
He noted that debt servicing absorbs 32 percent of spending, while transfers to other government entities take 29 percent, leaving limited room for essential services.
“The crowding effect of compensation means that whilst we spend 39 percent of our budget on compensation, only 3 percent is used for goods and services.” - Finance Minister, Cassiel Ato Forson
He added that capital expenditure stands at just 6 percent and social benefits at a marginal 1 percent.
The Minister further indicated that Ghana’s compensation-to-tax revenue ratio has climbed to 44 percent, exceeding the ECOWAS benchmark of 35 percent, highlighting deep structural imbalances.
Government borrowing to pay workers
Providing further insight, Dr Forson disclosed that government had to borrow significantly to bridge the gap between revenue and wage obligations.
Out of GH¢183 billion in non-oil tax revenue recorded in 2025, large portions were allocated to statutory funds and debt servicing, leaving insufficient funds to cover salaries.
“This means that what was left… was not enough to pay workers. Government had to borrow GH¢17 billion… Simply put, we borrowed to pay Ghanaian workers.” - Finance Minister, Cassiel Ato Forson
The Minister also raised concerns about inefficiencies in the wage-setting system, pointing to the growing number of institution-specific pay arrangements.
He argued that some of these frameworks create disparities and conflict with existing laws, including the 1992 Constitution and guidelines by the Fair Wages and Salaries Commission.
“These enactments create chaos and inequalities in pay administration,” he warned, calling for urgent reforms to restore fiscal balance and ensure long-term sustainability.
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