Variations in allowances for public sector employees exacerbating earning inequalities

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Economic Allowances Inequalities
Economic Allowances Inequalities

Variations in amounts of allowances paid to public sector employees are exacerbating earning inequalities, a new Ghana Statistical Service (GSS) study has shown.

This has created a wider disparity in the gross earnings of employees, with persons getting higher net salary averagely earning higher allowances.

The study titled: “Ghana 2022 Earnings Inequality in the Public Sector”, revealed that the average allowances of people with a basic salary of between GH₵5000 and GH₵9999 are more than 26 times larger than their counterparts with basic salaries below GH₵1000.

Speaking to findings of the report, Prof Samuel Kobina Annim, the Government Statistician said one of the ways to address earnings inequality was through progressive statutory deductions where higher earners paid more.
He said the difference in deductions among income groups, though progressive, was marginal and had minor impact on reducing earnings inequalities.

The study indicated that while those with salary above GH₵10,000 had statutory deduction of an average of 25 per cent of gross salary, those with salary between GH₵2999 and GH₵1000 paid 20 per cent of the gross salary as statutory deductions.

It was also highlighted that basic salary, deductions and allowances all increased with age and highest for the age group 50 to 60 years.

“However, the rate of upward changes in earnings between ages 20 and 40 years is marginally steeper compared to increases after age 40 years,” the report indicated.

The study analysed the December 2022 earnings of 687,984 public sector employees belonging to 50 Ministries, Departments and Agencies (MDA) and on 129 payrolls who received GH₵2.3 billion in salaries and allowances.

The data derived from the Controller and Accountant General’s Department was not exhaustive as it excluded Article 71 office holders, public universities employees, security agencies and other non-subvented institutions.

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