Public Sector Wages Dominate Government Spending, Finance Minister Warns

Finance Minister Dr Cassiel Ato Forson has revealed that compensation for public sector workers continues to account for the largest share of government expenditure, significantly limiting spending in other critical areas.

He made the remarks during a meeting with Organised Labour at Jubilee House in Accra on Tuesday, March 17, as part of ongoing consultations between the government and labour groups.

According to the Finance Minister, employee compensation currently represents 39 percent of total government expenditure, compared to 32 percent allocated to debt servicing and 29 percent to grants for other government entities.

Dr Forson noted that the size of the wage bill is creating a “crowding-out effect,” restricting the government’s ability to invest in essential sectors. He explained that while a substantial portion of resources is devoted to salaries, only three percent of expenditure goes toward goods and services, and just six percent is allocated to capital investment.

He further highlighted that social benefits account for only one percent of government spending, while statutory funds—classified as grants to other government units—make up about 24 percent. Debt servicing, he added, continues to consume a significant share at 26 percent of total expenditure.

Providing additional context, Dr Forson stated that by the end of the 2025 fiscal year, compensation spending had reached 44 percent of non-oil tax revenue, 5.6 percent of Gross Domestic Product (GDP), and 33.78 percent of overall government expenditure.

He emphasized that these figures underscore the growing fiscal pressure posed by the public sector wage bill and the need for careful expenditure management.