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 Growth performance 1980-2017 2000.0 20.0 1800.0 GDP per capita in US$ 15.0 1600.0 1400.0 Growth (%) 10.0 1200.0 1000.0 5.0 800.0 0.0 600.0 400.0 -5.0 200.0 0.0 -10.0 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 Sectoral Composition of GDP 1965-2017 (%) 100.0 80.0 60.0 40.0 20.0 0.0 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 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 61.1 53.1 54.9 41.6 44.7 35.9 Agriculture 12.9 15.5 14.2 15.4 14.6 18.2 Industry o/w manufacturing 10.9 10.7 11.7 10.7 9.1 13.5 26.0 31.5 30.9 43.0 40.9 45.9 Service 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 83.8 83.9 87.3 86.2 88.0 86.7 Informal 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 ’m ent 20.9 21.2 22.0 23.1 26.3 25.3 Vulnerable empl ’m ent 77.4 74.9 75.4 67.5 68.7 68.7 �

Employment & Unemployment Unemployment Rates (%) Unemployment Rates (%) 20 15 10 5 0 1984 1999 2000 2003 2006 2010 2013 2015 15+ 15-24 • Worsening unemployment situation over the last decade (a (period of rapid growth)

Employment & Unemployment Unemployment rates by education 16 14 No educ 12 Primary 10 Jun High Sch 8 Sen. High Sch 6 Voc/Tech 4 Tertiary 2 0 2010 2013 2015 High unemployment rates among educated than less educated

Employment & Unemployment Educated youth (secondary+) unemployment rate by program of study: 2015 19.1 18.5 17.9 20.0 16.5 16.6 15.2 15.0 12.6 15.0 7.2 10.0 3.4 5.0 0.0

Poverty and Inequality Poverty & Inequality 70 Poverty & Inequality 60 50 40 30 20 10 0 1987/8 1988/8 1991/9 1998/9 2005/0 2012/1 2016/1 8 9 2 9 6 3 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

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 Pattern of Employment and GDP Growth 1984-2015 Total Employment GDP Growth Employment growth Employment and GDP Growth (%) 16 14.0 Total employment (in millions) 14 12.0 12 10.0 10 8.0 8 6.0 6 4.0 4 2.0 2 0 0.0

Employment response to Growth Linear Regression approach Arithmetic Elasticity Regression1991-13: Dep. Var. – log of employment Variable Base Base+ controls log of Real GDP 0.632*** 0.216*** Year Employment log of Real MW) -0.009 elasticity of Output --- log of population --- 0.839*** Dummy for rebasing -2.107*** -0.717*** 1991-99 0.760 Constant -1.943** -13.351*** 1999-06 0.679 R 2 0.9836 0.9965 2006-13 0.505 F-stats 628.57*** 1368.17*** LM test for autocorr. Chi2 11.81*** 0.446 2013-17 0.511 BP test for Hetero Chi2 3.64* 2.19 Omitted var. test 28.95*** 1.71 1991-13 0.598 N 23 23 *** p-value < 0.01 ** p-value < 0.05 * p-value < 0.10 1991-17 0.593

Poverty response to Employment & Output Year Poverty Poverty Elasticity of Poverty elasticity of Productive Elasticity of Employment Employment 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 4.6 3.4 4.7 4.2 Share 30.4 23.0 19.2 Manufacturing Growth 2.2 4.4 2.9 3.2 Share 7.7 5.7 4.6 Extractives Growth 8.7 59.4 11.0 27.8 Share 2.4 8.8 5.1 Finance Growth 13.8 17.3 2.5 12.0 Share 4.2 6.0 9.0

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 Educational attainment of the Labour Force (%) 100 4.3 4.0 5.6 5.9 7.0 Distribution of Labor Force by 10.3 9.9 11.9 11.0 12.5 13.0 16.7 80 level of education (%) 34.7 60 51.3 47.8 48.1 56.7 49.5 40 48.7 20 36.0 34.8 32.0 24.9 23.5 0 2000 2003 2006 2010 2013 2015 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 Graduate output from Public universities by major program 100.0 3.4 2.5 2.8 5.6 12.9 14.5 17.6 13.8 80.0 6.9 14.6 11.6 9.3 Health Science 22.9 60.0 Applied Science 22.5 34.9 34.0 Bus. Architect & Planning 40.0 Arts/Soc. Science 53.2 46.3 20.0 34.9 35.7 Education 0.0 2011 2012 2013 2014

The Why Question Graduate Output of Polytechnic by major programs 2010- 2015 100.0 21.4 21.1 22.3 25.2 26.9 26.9 80.0 60.0 Engineering & Tech 40.0 78.6 78.9 77.7 74.8 Business & Mgt 73.1 73.1 20.0 0.0 2010 2011 2012 2013 2014 2015

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

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