Informal Sector Contribution to GDP Pegged at 27.4%
The Ghana Statistical Service (GSS) in a new report has underscored the stark imbalance between employment distribution and economic output, revealing that while 80% of Ghana’s workforce operates in the informal sector, their contribution to GDP stands at a mere 27.4%.
The National Report on Productivity, Employment, and Growth released by the GSS, highlights the entrenched nature of informal employment, which has seen little decline over the years. Informal sector work, predominantly comprising self-employed individuals with irregular earnings, contrasts sharply with formal sector employment, where employer-employee relationships are more structured and subject to national labor standards.
The report estimates that formal employment accounts for only 20.2% to 27.4% of the labor market.
Low Productivity and Structural Challenges
The report further notes that the incidence of productive employment remains low, ranging between 25.3% and 34.1% of total employment.
It warns that the lack of formal work arrangements significantly curtails access to social protection schemes, including social insurance, and constrains workers’ ability to contribute effectively to economic growth.
Crucially, the findings suggest that the informal sector’s low productivity is a structural barrier to sustainable economic expansion. While the informal economy serves as a critical employment buffer, its limited contribution to GDP raises concerns over long-term economic resilience.
The GSS report stresses that productivity and decent work are mutually reinforcing, arguing that improved wages and working conditions can drive higher productivity, just as productivity gains can lead to better compensation and job security.
Policy Imperatives
The findings add weight to calls for policies aimed at enhancing productivity in Ghana’s informal sector. Experts have long argued that boosting financial inclusion, strengthening social protections, and facilitating the transition of informal enterprises into the formal economy could help address the productivity gap.
With Ghana’s economy facing fiscal pressures, the report underscores the urgency of structural reforms to harness the economic potential of its vast informal workforce.
