Ghana’s informal sector employs nearly 80 per cent of the workforce but contributes only 27 per cent of Gross Domestic Product(GDP), highlighting a major productivity gap, according to the first edition of the National Report on Productivity, Employment, and Growth, released by the Ghana Statistical Service.

Low productivity

The report warns that despite providing livelihoods for the majority of workers, the informal sector remains plagued by low productivity, underemployment, and stagnant wages, posing a significant challenge to economic growth.

According to the report, labour productivity grew by an average of 3.2 per cent annually between 1991 and 2019, with key gains concentrated in capital-intensive sectors such as mining and finance.

The manufacturing sector recorded a 14 per cent productivity increase between 2013 and 2022, yet employment grew by only 2.5 per cent in the same period, reflecting slow industrial expansion.

Similarly, the mining sector saw high productivity growth but little job creation, highlighting Ghana’s reliance on industries that do not generate widespread employment opportunities.

The report also reveals a widening gap between productivity and wages. While sectors such as finance, insurance, and professional services have seen stronger wage growth, industries like household agriculture, trade, and repair services have recorded slow or stagnant wage increases despite productivity improvements.

Sectoral breakdown

A sectoral breakdown shows that commercial agriculture, transportation, utilities, and manufacturing are among the industries contributing to both job creation and productivity gains.

However, Ghana’s economic transformation remains slow, with many workers transitioning from traditional trades to low-productivity urban services, limiting overall economic benefits.

Recommendations

To address these challenges, the report calls for greater investment in industrialisation, expansion of commercial agriculture, and policies to integrate informal businesses into the formal economy.

It also emphasises the need for technology adoption, workforce upskilling, and targeted fiscal measures to boost productivity.

With Ghana at a crucial economic turning point, analysts warn that without bold policy reforms, the country risks deepening income inequality, slowing productivity growth, and failing to create sustainable jobs for its workforce.