John Mahama’s 10% wage increase could worsen inflation – Labour Consultant Austin Gamey warns

Labour Consultant Austin Gamey has cautioned that the government’s recent approval of a 10% wage increase for public sector workers could worsen inflation, stressing that salary adjustments should be linked to productivity.

His remarks follow the government’s announcement of the pay rise after successful negotiations between the Labour Union and President John Dramani Mahama, who personally engaged with union leaders to secure their support. This marks the second wage hike in less than a year, following a 23% adjustment in 2024 aimed at addressing the rising cost of living.

While the increment has been welcomed by public sector workers, Gamey believes it is excessive and could have negative economic consequences. Speaking to Citi News, he noted that Ghana has yet to fully implement a performance-based pay system, particularly in the public sector.

“The issue is base pay. Normally, it should be based on productivity, but we are yet to get there as a nation. The private sector responds well, but the public sector doesn’t. So, for fairness, the 10% is about the best for now. I would have preferred something else,” he said.

He further warned that even a minor adjustment in public sector wages could push inflation higher, ultimately affecting both workers and the broader economy.

“I would have preferred it lower. Because even a 1% adjustment on the public sector wage takes us to another inflationary bracket, and that comes back to bite all of us, including them,” he added.