Ghana: Growing amidst job creation & inequality challenges - - PowerPoint PPT Presentation

Ghana: Growing amidst job creation & inequality challenges

William Baah-Boateng

Department of Economics

University of Ghana Legon

Outline

• Economic growth
• Employment & Unemployment
• Poverty and Inequality
• Employment response to economic growth
• Poverty response to employment & output
• The “Why” question
• Conclusion

Introduction

▪ After recovering from economic recession in the late 1970s and early 1980s, Ghana has not looked back in terms of growth. ▪ Growth averaging 5.6% over (1984-2017) peaking at 14.0% in 2011 after oil recovery. ▪ Attained middle income status in 2007 after rebasing of national accounts in 2006. ▪ Confronted however with job creation and inequality challenges and gains in poverty reduction seems reversed

Economic Growth

• 10.0
• 5.0

0.0 5.0 10.0 15.0 20.0 0.0 200.0 400.0 600.0 800.0 1000.0 1200.0 1400.0 1600.0 1800.0 2000.0

Growth (%) GDP per capita in US$

Growth performance 1980-2017

GDP per capita_GH Growth_GH Growth_SSA

• Better growth performance compared to SSA average
• Attained Middle income status after rebasing in 2006

Economic Growth

0.0 20.0 40.0 60.0 80.0 100.0 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016

Sectoral Composition of GDP 1965-2017 (%)

Agric share

• Manuf. Share

Other_industry Service

Employment & Unemployment

Economic Sector 1984 2000 2006 2010 2013 2015 Total Emplment (ml) 5.42 7.43 9.14 10.2 12.0 12.5 Economic Sector Agriculture 61.1 53.1 54.9 41.6 44.7 35.9 Industry

• /w manufacturing

12.9 10.9 15.5 10.7 14.2 11.7 15.4 10.7 14.6 9.1 18.2 13.5 Service 26.0 31.5 30.9 43.0 40.9 45.9 Institutional Sector Public 10.2 7.2 5.7 6.4 5.9 7.3 Private 6.0 8.9 7.0 7.4 6.1 6.0 Informal 83.8 83.9 87.3 86.2 88.0 86.7 Type of Employment Wage employment* 16.2 16.0 17.5 18.2 20.2 22.5 Self-employment 69.7 73.5 59.5 60.8 50.6 64.6 Quality of employment Productive empl’ment 20.9 21.2 22.0 23.1 26.3 25.3 Vulnerable empl’ment 77.4 74.9 75.4 67.5 68.7 68.7

Employment & Unemployment

• Worsening unemployment situation over the last

decade (a (period of rapid growth)

5 10 15 20 1984 1999 2000 2003 2006 2010 2013 2015

Unemployment Rates (%)

Unemployment Rates (%)

15+ 15-24

Employment & Unemployment

2 4 6 8 10 12 14 16 2010 2013 2015

Unemployment rates by education

No educ Primary Jun High Sch

• Sen. High Sch

Voc/Tech Tertiary

High unemployment rates among educated than less educated

Employment & Unemployment

0.0 5.0 10.0 15.0 20.0

3.4 7.2 12.6 15.0 15.2 16.5 16.6 17.9 18.5 19.1

Educated youth (secondary+) unemployment rate by program of study: 2015

Poverty and Inequality

1987/8 8 1988/8 9 1991/9 2 1998/9 9 2005/0 6 2012/1 3 2016/1 7 Poverty 55.8 60.6 51.7 39.5 31.9 24.2 23.4 Extreme pov 36.4 41.6 36.5 26.8 16.5 8.4 8.2 inequality 35.4 36.0 38.1 40.8 41.9 42.3 43.0 10 20 30 40 50 60 70

Poverty & Inequality

Poverty & Inequality

Poverty and Inequality

Year Number of Poor Number of Extreme Poor 1991/92 7.7 million 5.4 million 1998/99 7.1 million 4.9 million 2005/06 7.0 million 3.6 million 2012/13 6.4 million 2.2 million 2016/17 6.8 million 2.4 million

• The number of poor and extreme poor in Ghana has

increased by 6.25% and 9.1% respectively

Employment response to Growth

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 2 4 6 8 10 12 14 16 Total employment (in millions) Employment and GDP Growth (%)

Pattern of Employment and GDP Growth 1984-2015

Total Employment GDP Growth Employment growth

Employment response to Growth

Arithmetic Elasticity

Year Employment elasticity of Output 1991-99 0.760 1999-06 0.679 2006-13 0.505 2013-17 0.511 1991-13 0.598 1991-17 0.593

Regression1991-13: Dep. Var. – log of employment Variable Base Base+ controls log of Real GDP 0.632*** 0.216*** log of Real MW)

• 0.009

log of population

• 0.839***

Dummy for rebasing

• 2.107*** -0.717***

Constant

• 1.943**
• 13.351***

R2 0.9836 0.9965 F-stats 628.57*** 1368.17*** LM test for autocorr. Chi2 11.81*** 0.446 BP test for Hetero Chi2 3.64* 2.19 Omitted var. test 28.95*** 1.71 N 23 23 *** p-value < 0.01 ** p-value < 0.05 * p-value < 0.10

Linear Regression approach

Poverty response to Employment & Output

Year Poverty elasticity of Employment Poverty Elasticity of Productive Employment Poverty Elasticity of Output 1991-1999

• 0.361
• 2.16
• 0.243

1999-2006

• 0.060
• 4.62
• 0.040

2006-2013

• 0.326
• 1.04
• 0.165

2013-2017 1.550

• 1.41

0.312 1991-2013

• 0.252
• 1.65
• 0.150

1991-2017

• 0.161
• 1.72
• 0.087

The Why Question

• Demand side issues – Growth driven by

– low labour absorption sectors like extractives (mining and oil), finance; while – Employment intensive sectors – agriculture, manufacturing and tourism shrink.

The Why Question

Sector 2007-10 2011-14 2015-17 2007-17 Agriculture Growth Share 4.6 30.4 3.4 23.0 4.7 19.2 4.2 Manufacturing Growth Share 2.2 7.7 4.4 5.7 2.9 4.6 3.2 Extractives Growth Share 8.7 2.4 59.4 8.8 11.0 5.1 27.8 Finance Growth Share 13.8 4.2 17.3 6.0 2.5 9.0 12.0

The Why Question

• Low quality of labour and slow pace of improvement

feeding into high informality

• Only 10% of 16 million labour force have tertiary education

48.7 36.0 34.8 32.0 24.9 23.5 34.7 47.8 51.3 48.1 56.7 49.5 11.0 11.9 9.9 13.0 12.5 16.7 5.6 4.3 4.0 7.0 5.9 10.3 20 40 60 80 100 2000 2003 2006 2010 2013 2015 Distribution of Labor Force by level of education (%)

Educational attainment of the Labour Force (%)

No educ Mid/JHS or Less Sec/Voc/Tech Post-sec&Tertiary

The Why Question

• Skills mismatch concerns – Excess supply of

Arts/social science/business against STEM

34.9 53.2 46.3 35.7 34.9 22.9 22.5 34.0 9.3 6.9 11.6 14.6 17.6 14.5 13.8 12.9 3.4 2.5 5.6 2.8 0.0 20.0 40.0 60.0 80.0 100.0 2011 2012 2013 2014

Graduate output from Public universities by major program

Health Science Applied Science

• Bus. Architect & Planning

Arts/Soc. Science Education

The Why Question

73.1 73.1 78.6 78.9 74.8 77.7 26.9 26.9 21.4 21.1 25.2 22.3 0.0 20.0 40.0 60.0 80.0 100.0 2010 2011 2012 2013 2014 2015

Graduate Output of Polytechnic by major programs 2010- 2015 Engineering & Tech Business & Mgt

Conclusion

• Strong growth driven by natural resource exploitation

without value addition has adverse implication for jobs and inequality

• Structural change from agriculture to service with the

missing middle constraints generation of productive employment amidst income inequality.

• Linking agriculture to light manufacturing could

reverse rising joblessness in a strong growth economy

Thank You