8% pay rise: Workers will be better off in real terms— Dr Acheampong

Workers in the public sector are expected to be better off in real terms than they were in several previous years, as easing inflation helps preserve the purchasing power of their salaries, Technical Adviser at the Ministry of Finance, Dr Theo Acheampong, has said. He said the impact of salary adjustments should not be assessed solely by the percentage increase workers receive but by how much of that increase remains valuable after accounting for inflation. Dr Acheampong explained that a moderate wage increase accompanied by lower inflation could improve workers’ real incomes more effectively than a substantial salary adjustment in an economy experiencing rapid price increases. Speaking on Joy News’ PM Express on Monday, November 2, on the 8 per cent increase in base pay for public sector workers in 2027, he said the government’s objective was to pursue sustainable wage adjustments while keeping inflation under control. “The fundamental issue is how much purchasing power those salaries are able to actually retain,” he said. Dr Acheampong illustrated the point with a hypothetical 9 per cent salary increase against inflation of between five and six per cent, which, he said, would translate into a real wage improvement of about three to four per cent. Under such circumstances, workers would be better off because their earnings would have gained value after accounting for the rise in the cost of goods and services. He argued that this was preferable to granting a 25 per cent salary increase in an environment where inflation exceeded 40 or 50 per cent, as the rapid rise in prices could erode the gains from higher pay. Lessons from previous years Dr Acheampong said historical figures dating back to 2010 showed that there had been several years in which inflation exceeded adjustments in base pay, leaving public sector workers worse off in real terms. He cited 2022 as an example, when the base pay adjustment was seven per cent, while the Cost of Living Allowance (COLA) was increased by 15 per cent, bringing the combined adjustment to approximately 22 per cent. However, inflation stood at about 54 per cent that year, meaning the combined wage adjustment fell significantly short of the increase in prices. In 2023, public sector workers received a 30 per cent salary adjustment, but inflation was still about 23 per cent, limiting the improvement in their purchasing power. He said the trend began to change in 2025, when end-of-year inflation stood at 5.4 per cent, compared with a 10 per cent salary adjustment. For 2026, he said the government was working with a projected inflation rate that was likely to remain within the single-digit target band, against a salary adjustment of nine per cent. The figures, he argued, demonstrated why the relationship between wage increases and inflation was critical in determining whether workers were actually making financial progress. Dr Acheampong’s comments come amid public discussion of the 8 per cent base pay increase agreed for public sector workers in 2027. He maintained that the measure of a successful wage adjustment should be the extent to which it improves workers’ ability to meet their needs, rather than the headline percentage announced.