Abstract
Structural transformation can spur economic growth and development if it increases overall productivity growth. A labor market environment that enables workers and enterprises to transition smoothly across sectors and into more productive economic pursuits can enhance the effect of structural transformation on economic growth. This study examines Ghana’s recent record of structural transformation and labor market performance. Based on the findings, the study proposes ways to further transform the country’s economy, in a way that stimulates stronger, sustained growth and produces gainful, productive, and inclusive private employment. The COVID-19 pandemic and associated global economic crisis have posed a substantial setback to Ghana’s economic progress and plans, but these challenges also underscore the need for structural transformation that can both strengthen economic performance and improve labor conditions and outcomes.
Highlights
Over the last three decades, Ghana has experienced strong, sustained economic growth, which has contributed to a substantial reduction in the extent and depth of poverty
How do Ghana’s labor market indicators compare to those of other countries at its national income level? How have Ghana’s labor market indicators evolved over the recent past? And what is the association between Ghana’s GDP growth and its employment in the recent past and how does it compare to other countries? We examine these questions based on analysis of labor market statistics for various countries and years modeled by the International Labour Organization (ILO)
What is the current structure of the labor market in Ghana? What do current labor market conditions and outcomes look like? And how do current conditions and outcomes differ across population subgroups, namely women versus men, youth versus nonyouth, rural versus urban residents, and poor versus nonpoor? We examine these questions based on analysis of data from the Ghana Living Standards Survey 2016/17.50 All analysis is restricted to the working-age population, defined as ages 15–64 years
Summary
Over the last three decades, Ghana has experienced strong, sustained economic growth, which has contributed to a substantial reduction in the extent and depth of poverty. To achieve growth-enhancing structural transformation and economic diversification, the World Bank’s Ghana Country Private Sector Diagnostic (CPSD) 2017 identifies sectors to prioritize for investment and development.6 These sectors are: agribusiness, education, energy, finance, health, information and communications technology (ICT), and transport. We examine the current extent and nature of labor market participation, including for important population subgroups such as women and youth; the characteristics of nonfarm enterprises, including their productivity; and the employment characteristics of workers in priority sectors identified in the Ghana CPSD 2017. Interventions need to go beyond skills development to address the myriad, other potential constraints to productive, gainful private wage and self-employment, related to knowledge, technology, labor, land and property, physical and financial capital, networks, and market-entry support.
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