Ghana's workforce comprises civil servants, public sector employees, and private sector workers. In recent developments, about 10% of the population has received a salary increment. However, this increase does not necessarily translate into a substantial financial benefit due to the accompanying tax adjustments. Once taxes are deducted, employees will only see a 6% increase in their take-home pay, significantly reducing the real impact of the increment.

Inflation and Its Impact on the Economy

Inflation is often viewed as a negative phenomenon, but it can also be used to increase or decrease money supply in the system. Governments sometimes create inflation intentionally, particularly during campaign periods when unaccounted-for funds are injected into the economy. Reports indicate that the Bank of Ghana has exceeded its money-printing limits, contributing to inflationary pressures by generating additional funds for campaign activities. During elections, money is distributed without taxation, often referred to as "free money."

One of the primary concerns regarding inflation is the lack of accountability for money pumped into the system. At the time of the election, not even the Bank of Ghana knew the exact amount circulating due to excessive money printing. This results in price instability and reduces citizens' purchasing power. If only about 10% of the population experiences a salary increment while broader economic conditions remain unchanged, the overall impact on inflation is minimal. However, without addressing the root causes of inflation, economic hardship will persist.

The Tax Burden on Public Sector Workers

Public sector workers cannot avoid taxation, meaning any salary increment is offset by higher tax deductions. Consequently, the real financial benefit is significantly lower than anticipated. Meanwhile, civil servants, who also contribute to national development, expect similar recognition and rewards. Private sector workers, on the other hand, bear the brunt of inflation without direct government interventions in salary adjustments.

Instead of relying solely on salary increments, there should be a more collaborative approach to reward workers effectively. Incentives such as fuel coupons and transportation allowances could provide a more practical solution. Unlike salary increments, fuel allowances are not taxed and could offer more tangible relief for workers. Implementing alternative benefits would ensure that workers experience actual economic relief rather than seeing their salary increase eroded by rising costs and taxes.

Challenges in the Transportation Sector

Ghana lacks an efficient distribution system, and these challenges significantly affect transport operators. For instance, if a driver travels to remote areas and experiences vehicle wear and tear, such as needing to replace shock absorbers, they will inevitably find a way to recover the cost. This additional financial strain is passed down to consumers, further escalating the cost of goods and services.

The Impact of Fuel Prices on the Economy

One of the most critical economic concerns remains fuel prices, which significantly impact the cost of living. When fuel prices increase, transportation (distribution channels) costs rise, which in turn affects the prices of goods and services across the country. Addressing challenges in the energy(petroleum) sector and investing in alternative energy sources would provide a more sustainable economic solution.

Rather than focusing solely on salary increments, policymakers should prioritize stabilizing essential commodities. If salaries are increased by 100% but fail to meet essential needs, the effort is futile. A structured approach is necessary to ensure that economic adjustments benefit the broader population. The government should focus on stabilizing the prices of food, fuel, and utilities to provide real economic relief to citizens.

Policy Considerations for a Sustainable Economy

Historically, no president has implemented salary increments within the first 100 days of office. However, the current administration prioritized workers' welfare and approved the increment within its first 60 days. While this demonstrates responsiveness to public concerns, a more comprehensive approach is required to ensure that all sectors feel the economic impact.

To achieve meaningful economic relief, salary increments should be accompanied by broader policies addressing inflation, fuel prices, and essential commodities. The average Ghanaian earns between 5,000 and 7,000 cedis, and the actual benefit of the recent increment translates to approximately 400 cedis—a sum that is quickly absorbed by rising fuel costs. Without additional measures to control inflation and reduce the cost of living, wage increases will have little effect on improving the financial well-being of citizens.

Additionally, if Ghana were more actively engaged in exporting, it would generate more foreign exchange, bringing more dollars into the system. This would help stabilize the currency and reduce inflationary pressures. A strong export sector is essential for maintaining economic balance and ensuring a steady flow of revenue into the system.

Conclusion

For real economic relief, a nationwide strategy should be implemented to support all workers and stabilize key sectors of the economy. Policymakers must shift their focus from temporary solutions, such as salary increments, to sustainable measures that ensure long-term financial stability. Addressing fuel prices, improving public transportation, and investing in alternative energy sources should be prioritized to create a more resilient economy. By implementing a well-structured economic framework, Ghana can provide lasting relief to its workforce and promote overall economic stability.