President John Mahama has announced a major overhaul of Ghana’s public-sector pay system, declaring 2026 the transition year from the Fair Wages and Salaries Commission to a new Independent Emoluments Commission.
The President made the announcement yesterday, Tuesday, March 17, at the Jubilee House during a high-level dialogue with Organised Labour, describing the move as a bold structural reform to address longstanding disparities in public-sector remuneration.
He said Ghana’s current pay system has, over the years, been characterised by inequities, recurring labour disputes, and challenges in balancing workers’ fairness with the country’s fiscal realities.
“It is my firm conviction that the time has come not for just incremental adjustments, but for bold structural reforms in how public sector emoluments are determined and managed,” President Mahama stated.
Under the proposed reform, the new Independent Emoluments Commission will establish a transparent, rule-based, and evidence-driven framework for determining salaries and benefits across the public sector.
The system, he explained, will be guided by factors such as productivity, labour market conditions, fiscal sustainability and national development priorities, with the aim of linking pay more directly to performance.
President Mahama emphasised that the transition is not aimed at dismantling the current framework but at building upon it, with the Fair Wages and Salaries Commission repositioned and strengthened to act as the technical backbone of the new structure.
He added that the reform would help tackle persistent inequalities, rationalise allowances and benefits, and shift Ghana away from fragmented salary decisions towards a more coherent and sustainable system.
“Our goal is to move to a system that is fair, responsible to taxpayers and sustainable for future generations,” he said.
The President assured organised labour that the transition would be carried out in stages and with full consultation of stakeholders.
As part of the process, he said the government will introduce a new legislative framework covering public-sector institutions, agencies, and state-owned enterprises, with a differentiated approach that reflects their financial capacities.
He clarified that the inclusion of Article 71 office holders would be considered only after the necessary constitutional and legislative processes are completed, at which point the commission would be elevated to a full constitutional body responsible for determining the emoluments of all public office holders.
President Mahama also indicated that 2026 will not see a full-scale renegotiation of conditions of service across the public sector.
“Instead, the government will carry out targeted, modest adjustments to specific allowances as an interim measure,” he said.
He said this approach is essential to sustain macroeconomic stability, manage expectations, and create the room needed to establish a credible and sustainable national emoluments framework.
“This is not a withdrawal from engagement with labour. It is a strategic effort to address the structural foundations of our compensation system in the interest of all,” he said.
The proposed Independent Emoluments Commission is expected to develop a comprehensive national policy to harmonise allowances, address pay disparities, and strengthen performance-based remuneration, aligning public sector pay with Ghana’s long-term development objectives.
President Mahama stated that every Ghanaian worker must retire with dignity, as he signalled a major review of the country’s pension system.
The President warned that Ghana’s pensions framework is at a critical turning point.
“My comrades and friends, our pension system stands at a critical crossroads,” he said, stressing that nearly two decades after the introduction of the three-tier pension system, coverage remains significantly low.
According to him, out of an estimated 10 million workers, fewer than two million are actively contributing to the scheme, raising concerns about its long-term sustainability.
He further revealed that pension assets currently stand at approximately GH¢100 billion, representing just about 7 per cent of Ghana’s Gross Domestic Product (GDP), a figure he noted falls below benchmarks seen in other African countries.
“If we fail to act, the imbalance between contributors and retirees will continue to deepen, threatening the system’s sustainability and the dignity of our future retirees,” President Mahama cautioned.
To address the challenges, the President announced that he has directed the Minister for Finance to undertake a comprehensive review of the pension structure.
The review, he explained, will focus on expanding coverage, particularly within the informal sector, modernising contribution systems, and strengthening governance and investment management.
“Our goal is clear, every Ghanaian worker must retire with dignity, with security and confidence in the pension system,” he stated.
The engagement with Organised Labour is part of the Presidency’s ongoing consultations to address key economic and social policy concerns affecting workers across the country.
Finance Minister, Dr Cassiel Ato Forson, has warned that Ghana’s public sector wage bill for 2025 has exceeded the recommended threshold set by the Economic Community of West African States (ECOWAS), raising concerns over fiscal sustainability.
Dr. Forson revealed that the 2025 compensation budget accounted for 44% of non-oil tax revenue, 5.64% of GDP, and 33.78% of total government expenditure.
He stressed that the ECOWAS convergence criterion recommends that compensation should not exceed 35% of non-oil tax revenue, making Ghana’s 44% figure well above the regional benchmark.
“Ghana’s compensation to tax revenue ratio of 44% for 2025 is higher and way above the ECOWAS threshold of 35%. The ECOWAS convergence criteria require that compensation should not exceed 35%, but in the case of Ghana, it is 44%.”
He explained that in 2025, non-oil tax revenue stood at GH¢183 billion, including the District Assemblies Common Fund, Ghana Education Trust Fund, and NHIA levy, which amounted to GH¢55.97 billion, and that debt servicing totalled GH¢64.3 billion.
This left only GH¢61.9 billion available for wages, yet the actual compensation bill reached GH¢78.9 billion.
However, the government’s wage bill alone amounted to GH¢78.9 billion, creating a financing gap that forced the state to borrow approximately GH¢17 billion just to meet salary obligations.
