GH¢800 Million Per Point: The Price Tag Hanging Over Government and Organised Labour Final Pay Talk

Every percentage point added to public sector base pay in 2027 could cost the state as much as GH¢800 million, an estimate that puts a price on the talks between government and Organised Labour as they head into their final stretch next week. The figure is based on the GH¢81.4 billion allocated to wages and salaries in the 2026 Appropriation Act. Not every worker on the government payroll is paid on the Single Spine Salary Structure, so the true cost of each point is likely to be somewhat lower, but the scale is clear: a 6 per cent award would add roughly GH¢4.9 billion to the wage bill, while a repeat of this year’s 9 per cent would add about GH¢7.3 billion.

Negotiations under the Fair Wages and Salaries Commission opened on Thursday, 15 October, and the Commission says they are expected to conclude next week. Reports that the two sides had already settled on 6 per cent have been denied by sources within the Commission, who told Citi News no agreement has been reached. The stakes are high on both sides of the table. On the side of government, compensation is already the largest item of public spending, with total compensation of employees, including pensions, gratuities and social security, budgeted at GH¢90.8 billion this year, about 5.7 per cent of GDP. Finance Minister Dr Cassiel Ato Forson said in March that, at the end of 2025, the wage bill consumed 44 per cent of non-oil tax revenue and about a third of total government expenditure, leaving capital investment at about six per cent.

On the workers’ path, the question is whether pay has kept up with prices, and the answer depends on which year is examined. In 2025, base pay rose 10 per cent while average inflation ran at about 14.6 per cent, leaving workers poorer in real terms. In 2026, the picture reversed: the 9 per cent increase has far outpaced inflation, which has averaged about 4.0 per cent this year, according to Fitch Solutions. Taken together, two years of pay rises totalling almost 20 per cent have done little more than restore public servants’ purchasing power to where it stood at the start of 2025. That calculation underpins Organised Labour’s case, with union leaders arguing that slower inflation does not mean lower prices, only that prices are rising less quickly.

Pressure is also coming from within the labour movement. Last year, the Concerned Labour Unions of Ghana condemned the 9 per cent deal as “meagre” and demanded at least 20 per cent, accusing Organised Labour leaders of conceding too much. Not everyone believes a large rise is warranted. Labour consultant Austin Gamey said last week that any increase “has to be based upon data,” warning that “the macro indicators are quite reasonable, and therefore you can’t go too high,” and that an excessive award could fuel inflation and undercut the very gains workers are seeking. The inflation outlook will weigh heavily on both sides, with the IMF expecting inflation to end this year at 4.8 per cent, the Bank of Ghana expecting prices to rise back into its 6 to 10 per cent target band over the coming quarters, and Fitch forecasting 6.8 per cent by December.

Government has slightly more room than a year ago, with the IMF signalling that Ghana’s primary surplus target could ease from 1.5 per cent of GDP to 0.5 per cent from 2027 without derailing debt goals, provided revenue and state-enterprise reforms continue. But that space must also fund the infrastructure and jobs agenda the government plans to unveil in the 2027 Budget, which the Public Financial Management Act requires to be presented by 15 November, with Dr Forson indicating it will come in the first week of the month. For the Fair Wages Commission, the challenge is to find a number that protects workers’ living standards without reopening the fiscal wounds of recent years. Whatever figure emerges next week will be written into the budget, and into the pay slips of hundreds of thousands of public servants.