1. April 10th, 2013
Labour Economics 432
Public Sector Pay Reform
in Ghana
Group 4
1. Shannon Chapman, 10431552
2. Alexander Teitelbaum, 10431541
3. Maame Otiwaa Boateng, 10305861
4. Samuel Adusei Baaye, 10300112

2. Introduction
Martin Ankomah of the Ghana Health Service defines employee reward as “all of the
monetary, non-monetary and psychological payments that an organization provides to its
employee in exchange for the work they perform” (Ankomah 1). Monetary payments can be in
the form of a fixed salary or wage and vary according to the level of skill required. Internal and
external relativities can influence employee pay. These relativities compare an employee’s pay to
both an employee in a similar position within and outside of the company or institution. These
levels of pay are then agreed upon through individual agreements and collective bargaining with
unions. Pay is arguably the most critical factor to sustaining a performing institution. From the
employee’s perspective, pay satisfies basic needs, provides incentives, allows for development of
new skills, and increases utility. From the employer’s point of view, pay is necessary to attract
competent employees and provide incentives for efficient, productive work.
Ghana has been a nation with increasing issues between the public sector labourers and
the government pay structure commission. Until 1997, Ghana had no universal, effective
structure for regulating pay, resulting in individual institutions to create their own structures.
From 1997 to 2006, the first major reform resulted in the Ghana Universal Salary Structure
(GUSS), but with little legal backing, few institutions conformed to the new system. Thus, in
2007, the Single Spine Salary Structure (SSSS) was designed to fix the issues that arose from the
first reform. While only two years old, this system is already under major public scrutiny.
Starting on March 18th, 2013, the teachers union for primary school education in Ghana
called for a nationwide strike in order to demand payment from the government. In a statement
to government, the union described concerns related to the non-payment of maintenance
allowance and delays in resolving outstanding promotions. After a two-strike, the teachers
returned to work after leaders of the union met with the President to create an action plan, but
several other groups talked about striking as well, including: the tertiary professors, airport
workers, and doctors (“Teachers Call off Strike”). As these issues continue to come to light, it is
increasingly clear that the public sector pay structure is not meeting the needs of the employees
they hope to serve. Especially in a developing country, the ability for the sector to attract
competent employees in the realms of education, legal, health, and safety is critical to the
development of a nation as a whole. As seen in the recent strikes, when the processes for

3. maintaining employee satisfaction break down in the public sector, the systems that maintain a
functioning society break down as well.
This paper focuses on public sector pay reform in Ghana; it looks at what caused reforms,
and the effect of such reforms. We intend to introduce and explain the GUSS and SSSS –
Ghana’s past and current public pay structures. We seek to present the intended goals of reforms
as well as the actual outcomes. We hope to present resolved problems and solutions, and uncover
current and possible future issues to be solved. In the end, we aim to provide recommendations
for further reform on the basis of past successes in Ghana, West Africa, and around the world.
Literature Review
This paper used many scholarly references to prepare this report on public sector pay
reform in Ghana. Public sector pay structures all over the world were examined, Ghana’s history
has been taken into account, and possible obstacles to reform have been scrutinized. The
following documents were major sources of information for the findings of this paper.
Simon Burgess and Marisa Ratto wrote The Role of Incentives in the Public Sector on the
issue of incentives in the public sector. Using the United Kingdom as their example, they seek to
“review the important issues in performance pay in the public sector” and find the effects of non-
wage incentives. (Burgess) Their objective is to find the effectiveness of non-wage incentives in
the public sector, and explain why this may be different than in the private sector.
Burgess and Ratto focus on previous studies and previous pay-for-performance schemes,
both in the private and public sectors. They found that in the private sector, productivity
increased through both motivating current employees and attracting better workers. While
warning that there is much more limited evidence in the public sector, Burgess and Ratto offer
both successful examples as well as cautionary tales. The latter include instances in which
employees aimed for quantity over quality, took action at the expense of fellow employees, and
only worked at measured or rewarded tasks, neglecting those that were not rewarded.
In addition, they report that manual labour workers, such as a maintenance worker in a
university, performance pay is equally likely in the public sector as private. However, these
schemes were much less likely for non-manual workers in the public sector, and where they did
they were based on a subjective measure of merit rather than an objective measurement, such as

4. a numerical goal. Burgess and Ratto conclude that this is most likely an inefficiency in the public
sector and should not be contributed to ineffectiveness.
As noted, there is not yet enough evidence to conclude the role of performance pay in the
public sector. The evidence pointing towards the inefficiency is” weak,” as is noted in The Role
of Incentives in the Public Sector. This is due both to a lack of study, as well as to complicating
factors such as output measurement and intrinsic motivations.
In October 2008, Victoria J. Cooper-Enchia introduced her paper Pay Reform in Ghana at
the African Association for Public Administration and Management’s Annual Roundtable
Conference. Her objective is to prevent an overview of the history of Ghana’s public sector pay
policy, and examine the latest reforms and their objectives. She explains that an efficient and
effective public sector is crucial to successful carrying out “the nation’s…development agenda,”
and if properly organized could potentially be the motivator for that progress (Cooper-Enchia).
Ghana Universal Salary Structure (1997) is cited as Ghana’s first attempt at reform. The
goal was to create more equitable pay among the entire public sector. GUSS was not all that
effective as much of the public sector did not convert to the new system. This is followed by the
Single Spine Salary Structure in 2006, which similarly tried to level the playing field in pay
levels, but had the added goals of encompassing all public sector employees and attracting
“requisite skills and competencies to the public sector” (Cooper-Enchia). The Fair Wages and
Salaries Commission was established in 2007 to carry out these tasks.
This paper concludes that Ghana has all the factors required for a successful, fair public
pay scheme, but implementation will present considerable obstacles.
Damian Grimshaw’s paper National systems of public sector pay surveys different
European nations’ public pay structures. Grimshaw “seeks to contribute to the debate on the
benefits of local versus national bargaining structures in the public sector” (Grimshaw). He
assesses national versus local bargaining, characterizes national systems of public sector pay, and
examines wage structure.
National systems of public sector pay explains public sector pay systems in three
different ways. It looks at fragmentation, centralization, and bargaining power. Fragmentation is
contrasted with integration and describes how different divisions of the public sector are paid
within the national structure. Centralization is defined by the extent to which a country’s pay
structure is controlled by its national government, as opposed to smaller districts. Lastly, the

5. spectrum of employee bargaining power stretches from free collective bargaining, in which the
employees and government agree on a wage level together, to unilateral employment regulation,
where the government sets the wage that its employees will be paid. Grimshaw goes on to
associate wage inequality with decentralization and fragmentation.
Grimshaw concludes that high levels of centralization and integration in the public sector
pay structure allow for more flexible pursuit and achievement of goals, such as economic
development. He states that, “In the short term…there is greater potential in these countries for
public protest and worker resistance against the planned budget cuts” but there is higher potential
for long term economic stability.
Martin Ankomah’s paper Enhancing Public Sector Employee Reward: The Case of Single
Spine Pay Policy focuses on employee compensation. Compensation includes “all of the
monetary, non-monetary and psychological payments” disbursed to an employee for duties
performed. Wage is only one aspect of compensation. The Single Spine Pay Policy is designed to
maximize compensation for public service employees. Ankomah seeks to survey the single spine
salary structure and the reasons for reform.
This paper cites three reasons for reform: an over-budget wage bill, wage inequality, and
wage compression. It states that SSPP seeks to solve these issues through a policy of equal pay
for work of equal value and linking pay to productivity. Ankomah ends by presenting
apprehensions to reform, such as a lack of confidence in the government and leaders in charge of
implementing and operating the new policies.
Methodology
The research is based on a thorough review of past literature pertaining to public sector
pay reforms in Ghana and abroad. The research was conducted by compiling information from
scholarly articles, conference publications, and government surveys over the last 20 years. This
allowed for a greater understanding of the evolution of public sector pay reform. In analyzing
this research the following objectives were identified.
While general conclusions were made in the writing of this paper, the major limitation is
the inability to conduct original econometric study or fieldwork. Since the most recent reform,
SSSS, was implemented in 2007, the challenges and issues are not fully realized. Systemic
evaluation of the new reform is becoming more critical in order to better understand pay

6. disparities and changes in external relativities. Given more time and resources, this would have
been possibility, but under the given conditions, this paper uses global comparisons to provide
recommendations for future study and policy implications. This however in its self is limited
since there is little research done on other countries with similar socio-economic qualities, like
other countries that are low to middle income as rated by the World Bank. Thus, conclusions
were draw from comparative study of pay structures around the world, comparisons of countries
with similar characteristics is limited.
Findings
Ghana Universal Salary Structure
From the time of independence in 1957 to 1992, Ghana went through turbulent political
reform. The continual coup d’etat’s and changing of government compounded the issue of pay
disparities and the growing wage bill. During the 1970’s until 1997, the government attempted to
set up various commissions to oversee pay in the public service, such as Issifu Ali Committee in
1973, Azu Crabbe commission in 1979, the National Committee for Wage and Salary
Rationalization in 1983, among many others. However, they commissions were unplanned and
unprepared to create significant change. Thus, most segments of the government, such as
customs, police, or education, created their own salary and grading structures unique to their
service. This led to the formation of more than 30 unions and employee associations to negotiate
individual sector pay reforms. With the establishment of the fourth republic in 1992, the
Government of Ghana began to lay the foundation for broader, more dramatic reform. In 1997,
the Ghana Universal Salary Structure (GUSS) was introduced (Cooper-Enchia 2).
A result of the Price WaterHouse pay reform recommendations, the GUSS was a 22-level
salary structure intended to resolve the inequities in pay across the public sector (Ghana Health
Service 4). Prior to implementation, a nationwide job evaluation was undertaken in order to
develop an enhanced salary structure and new grading structures. The intention was to transfer
all institutions over to the new system; however, many institutions did not transfer and without
legal backing or financial resources, little was done against them. The institutions that did not

7. transfer often held higher wages, making incentives to not adhere to the new system large. Thus,
the first comprehensive reform in Ghana had little lasting effect.
Single Spine Pay Policy
With the GUSS only have a marginally effect on the issues with public pay structures, in
2006, the government decided to adopt a new structure, the Single Spine Pay Policy (SSPP). The
change to an entire new system was part of the recommendations of CoEn consulting, who
identified the following major issues:
1. Low levels of pay
2. Inequalities within and across the sector
3. Multiplicity of allowances
4. Lack of control over the wage bill
Moving from a 22-level salary structure to a 25-level salary structure, the Single Spine Salary
Structure (SSSS) did not allow for any institution to opt out and unified all public service
workers under Article 190 of the 1992 Constitution ("Historical Background"). Instead of a
variable base pay and variable relativities across sectors, SSSS has a common base pay and
relativity for jobs of equal value. Other than this objective, several other goals were identified,
including:
 Managing the wage bill more efficiently
 Ensuring compliance and enabling monitoring
 Minimizing union group tensions related to distortions and low pay
 Connect pay with productivity
There were eleven stages of implementation, including the design and determination of
wages, which allowed for the negotiations of conditions with unions and association as well as
the development of a public sector-wide performance system (Ghana Health Service 7).
The Job Evaluation Exercise that allowed for the creation of SSPP was more thoroughly
conducted to guarantee the best results. It was developed with extensive consultation of
stakeholder groups, such as institutions, civil service members, and unions during its design and
implementation. This evaluation included gathering job content data from more than 5,000
public servants across 150 entities, development of more than 1,800 job specifications, and
placement of all public sector jobs onto this new grading structure. It was raised the minimum

8. wage from GH¢3.11 to GH¢3.73, effective February 15th, 2011 and will increase to GH¢4.48 in
February 2012. It established a base pay of GH¢1,329.70 per annum with a relativity ratio of
1.7% (Controller & Accountant's General Department). Figure 1 shows the level and grading
structure implemented with the new pay reform. It correlates to Appendix A, which shows the
monetary values for each level as of January 1st, 2011. The determination of grade steps for the
SSSS is based on the number of years, with before one year placing an employee on the first
step, one to three years placing them on the second, four to seven years placing them on the
third, above eight years placing them on the fourth, and so on.
Sourced: Controller & Accountant's General Department, 2011.
The evaluation took into account four broad factors: knowledge and skill, responsibility,
work conditions and environment, and effort. Below is the list of thirteen sub-factors taken into
account for the job-analysis & evaluation (Controller & Accountant's General Department).
1. Knowledge and Skill
a. Knowledge (knowledge required for satisfactory performance of job duties);

9. b. Learning Experience (practical work experience required to perform the job duties
satisfactorily); and
c. Judgment (exercising judgment in decision-making).
2. Responsibility
a. Consequence of Error (consequences of errors in decision making);
b. Financial Responsibility (responsibility for financial resources);
c. Responsibility for Assets (responsibility for assets and people – patients, students,
inmates, goods, tools, equipment, etc);
d. Supervisory Responsibility (supervision of others); and
e. Responsibility for relationships (responsibility for effective handling of personal
contacts with staff, clients, visitors, general public, government officials, private
sector, etc).
3. Work Conditions/Environment
a. Working Environment (exposure to undesirable conditions); and
b. Hazards (frequent exposure to hazards or the safety requirement under which the
work is performed).
4. Effort
a. Dexterity (the level of physical agility required by a job);
b. Physical Effort (physical fatigue that result from performing the duties of the job);
and Mental Effort (mental, visual and auditory fatigue that results from
performing the duties of the job).
Finally, it revised the categories of allowances. Category 1 includes allowances related
to normal job duties and responsibilities. Category 2 and 3 were isolated as the main issue during
the pay reform. These categories relate to special conditions, like overtime, and staff benefits.
These are often the areas where there are pay disparities across the sectors occur. The evaluation
therefore called for the standardization of these allowances. Lastly, Category 4 relates to benefits
with providing accommodation or standard of living for particular positions (Controller &
Accountant's General Department).
Based on past failures, a variety of issues were addressed, in addition to those stated
above. First, public service jobs were placed into nine classifications, such as health services,
security services, and regulators, based upon requirements for training, skills, and education as to

10. better determine equity in pay. One difference from the GUSS is that the SSPP does not include
public officials and the military into its pay structure, which could have far reaching implications
in the future. This also requires all unions within a service classification to negotiate at the same
time, allowing the Government to focus attention on only nine sessions a year, and reformed the
negotiation strategy to include only one round of negotiations between parties increasing the
likelihood of compromise and reducing transaction costs (Fair Wages and Salaries Commission
5).
Through the Fair Wages and Salaries Commission Act of 2007, there was a provision for
legal backing to carry out the new reform. This also established the Fair Wages and Salaries
Commission, which provides the oversight and regulatory duties to sustain the pay policy. Also,
it includes market premiums and inducements in order to attract certain, critical skill sets that are
lacking from the current population of public servants. The premiums would be directed towards
skills in short supply, such as petroleum engineers, but inducements would be directed towards
workers who are willing to work in underserved areas like teachers and health officials in rural
areas of Ghana. Figure 2 represents how market premiums can close the gap between public and
private sector employment wages.
Sourced: Lucifora, 2004.
However it recognizes that no single classification is eligible, thus, it created clear
guidelines for identifying jobs that do qualify and reviews them periodically. Finally, in attempt

11. to make the transition smoother, the government created a Conversion Difference for employees
whose salaries would be negatively affected, reducing the difference year by year (Fair Wages
and Salaries Commission 7). For example, if an employee has a salary of Gh¢250 on the SSSS,
but their current salary is Gh¢200 plus a category 1 allowance of Gh¢100, then the employee’s
total current salary will be Gh¢300, with a conversion difference of 50. This payment of the
conversion difference continues until the amount reaches zero (Controller & Accountant's
General Department).
Challenges
Creating a coherent wage and salary structure that will keep millions of employees
satisfied is a very difficult task, but it is the task undertaken by every government in the world,
including Ghana's Single Spine Salary Structure. The first problem to be solved is to decide upon
an appropriate wage bill. How much of a country's budget should be devoted to the public
sector? Too high, and money is wasted, but too low and productivity is not up to expectations.
Another issue to be solved is how to measure productivity. Public enterprises are not
profit-turning endeavors, so success can be hard to measure. It is not simply a monetary value. It
may be measures as a distance of road created, but the quality of road must also be taken into
account, and similar measures must be taken for all public sector positions.
There are two common issues that recur in public sector wage and salary. These are
salary erosion and wage compression. In salary erosion, real wages fall although nominal wages
may be holding constant. Wage compression is a situation in which low wages rise while high
wages stay constant. Both of these cause problems among public sector employees.
When it comes to correcting some of these public sector pay problems, there are many
barriers that may be encountered in reform. The most inhibiting barrier is politics. A government
must try to correct problems while keeping its people happy. If a country's wage bill is too large,
it may have to lay off employees, or at the very least freeze hiring. Neither of these would be a
popular decision. To fix wage compression or salary erosion, a selective increase in wages may
be prescribed, but this may also cause unrest. One example of this is in Peru, where a populist
movement prevented the government from a selective wage increase.

12. The Single Spine Salary Structure which was hailed by many workers in the country on
its Implementation and has faced some challenges and some of these challenges are; Firstly,
whiles the workers in the Ghana Police Service were very happy with the structure because their
salaries increased drastically which was not so before, others were not very satisfied with this
reform mainly because it lacked equity, transparency and fairness. For examples health workers
have complained about lack of transparency in the structure and the Ghana Prisons Service has
also come strongly against the policy because they thought it lacked equity.
Also, before salaries were negotiated collectively under the Public Services Joint
Negotiation Committee (PSJSNC) but now unions have agitated that the implementation of the
SSSS will lead to legal ramifications and gagged collective bargaining agreements. Again, the
Labour Act, 2003 (Act 651)10 grants workers the right to collectively bargain and stipulates that
a collective agreement on the terms and conditions of employment may be concluded between
trade unions and employer’s organisations. Under the provisions of Act 651, a certified union,
which is issued with a Collective Bargaining Certificate (CBA), is entitled to establish, with the
employer concerned, a Standing Joint Negotiating Committee to negotiate all matters connected
with the employment or non-employment or with terms of employment or with the conditions of
employment of its workers. People think with the implementation of the SSSS these rights will
be disregarded and workers not being able to fight for future improvements in their salaries and
conditions of service.
Another challenge with the implementation of the SSSS is the issue of payment of market
premiums. Market premium is a form of incentive paid for workers to keep them still working
for the country. Under the SSSS, not all jobs are eligible for market premiums. For instance
workers such as doctors, nurses and the police need to be paid market premiums to motivate
them and keep them still working in the country and prevent them from moving to the private
sector. Especially the health professionals need to be paid this premium to keep them at home.
As noted by Abbey11, their absence or insufficient presence could mean an
intensification of socio-political instability, which could flow out of poor health service delivery
in the country. Also, weak human resource management system in the public institution is
another challenging issue with the implementation of the SSSS. The human resource
departments and units of the various public institutions are expected to be at the forefront of this

13. change agenda of the new pay policy. The human resource departments and units lack the
capacity in terms of human resource professionals to effectively manage this change system.
The human resource information, monitoring and evaluation systems in the public institutions
are not quite effective. For example, there are problems with staff data and record keeping. As a
result of this, and also because of the way recruitment is done, staff are not always posted to
places of greatest need and also most human resource departments are vulnerable to corruption.
Moreover, it is argued that the implementation of the SSSS will cost the government of Ghana a
great deal of money that is an increase in the government wage bill. There are other areas where
money can be channelled to such as the provision of road networks and other infrastructures for
improvement instead of increasing the pay of workers.
Lastly, the various heads of agencies and the institutions in the public sector lack the
commitment to the implementation of the policy. They don’t fully acquaint themselves to the
SSSS. Most of these agencies and human resource departments lack accountability. Figure 3
describes common problems and measures taken to address public sector reforms.
Sourced: Antwi, 2008.
Most of these challenges are written in response to theoretical questions. No recent
studies have adequately researched the actual implementation of the SSSS, but the recent labour

14. crisis in Ghana signals key observed issues. As of April 9th, 2013; Ghana National Association of
Teachers (GNAT), the National Association of Graduate Teachers (NAGRAT), University
Teachers Association of Ghana (UTAG), and Ghana Medical Association (GMA) have gone on
strike. As previously stated, the GNAT and NAGRAT suspended their strike after a meeting with
the President; however UTAG and GMA have continued their strike even after meeting with the
National Labour Commission (NLC). The teachers were quoted saying that the government
owed them certain portion of their allowances. The doctors and pharmaceutists of the GMA
demanded payment of their market premium in arrears from 2012, and rejected the NLC’s ruling
for a payment schedule instead of in full ("Striking Doctors to boycott NLC meeting
Wednesday”). The Judicial Service Staff Association have also called for a strike in relation to
their salaries in arrears from 2012 ("Workers at Ghana’s courts threaten another strike”). Each
of the groups have also claimed that they have written to the FWSC and the government with
their grievances, but no action has taken place.
Andy Asamoah, a former member of the FWSC, has shed some light on the current
labour issues in statements to the Daily Graphic, the largest newspaper in Ghana. He stated that
the job evaluation meant to classify wages did not consult with stakeholders, and that allowances
and market premiums should be determined before the implementation of the policy. In reality,
as seen with the doctor’s strike, these issues are being discussed now. He also acknowledged that
not enough education of the policy was given to the labour force. When the salaries of the Police
Service rose with the implementation of SSSS, other workforces hoped for similar treatment.
There was no explanation of why certain jobs were placed on certain pay grades, such as the
Prison Service versus the Police Service. Finally, there is especially increased animosity between
public service employees, on SSSS, and public officers, who are not on the new pay structure.
He stated, “there would certainly be a problem when the government was reported to have paid
GH¢47 million as ex gratia to 230 Members of Parliament but had pleaded with public sector
workers to accept payment by installment” ("Place public sector workers on SSSS – TUC”).
Pay Structure Cross-Country Comparison
Public sector pay structures can be broken down in different ways. Three categories that
can be analyzed are fragmentation, centralization, and bargaining power. Here, different

15. countries pay structures will be compared. Ghana has employed a single spine, or integrated pay
structure, with centralized wages and collective bargaining.
In fragmented pay structures, such as the UK, different occupations have different pay
structures. The opposite of a fragmented pay structure is known as an integrated pay structure, or
single spine. In this system, which is used in Norway and Denmark, one uniform pay scale
applies to all government employees.
Centralization of wage scales is determined by whether wages are determined locally or
by the central government. Wages are highly centralized in Germany and the Netherlands, while
the UK and Sweden provide examples of very decentralized pay structures. In Sweden, the
public sector wage bill sets aside 1% for local negotiation costs.
Free collective bargaining is a very rare power for public servants. Denmark is one of the
few countries it exists in. Here, two-year agreements apply to all public sector staff. In most
countries where collective bargaining exists, it is qualified by the requirement of government
approval after negotiation or constrained by some other state-set limit. Sweden and the UK are
examples of countries that allow for collective bargaining with government approval. Very few
countries have completely unilateral wage setting; when this is the case it is very rarely for the
entire public sector. Germany unilaterally sets wages for 40% of their public sector, called the
Beamte, but even they benefit from the wage negotiations of the other 60% of the public sector.
(Grimshaw)
Determinants of public sector pay are different all over the world. Countries determine
how to pay their civil servants individually, and as a result there are many different systems.
Within the European Union, public servant wages differ greatly. There are many similarities and
differences between, for example, Britain, France, and Italy. In Britain and France, public sector
employee's have the ability to unionize to argue for higher wages. In France, however the
outcome of collective bargaining is not legally binding for the government. Collective bargaining
in Britain is binding, but not all that effective. Review bodies help to determine wage levels, and
contracting out has increased privatization in recent years. In Italy, wages are decided by the
central government. Other differences include private sector comparison, which is used in Britain
but not France and Italy, and a minimum wage, which is absent in Italy but present in Britain and
France. (Lucifora)

16. In Germany, one set of standard national agreements covered the entire public sector until
recently. In 2005, new collective agreements replaced the previous system. The new structure
placed greater impetus on performance and less on seniority. In addition, a low-wage pay grade
was introduced and separate agreements were reached for different employee groups such as
hospitals and transport. (Bosch)
It is widely believed that as relative pay for public sector positions declines, so will the
relative quality of the people seeking that position. In many cases, the public sector is in direct
competition with the private sector for employees, and the private sector often wins out. There
are many reasons for this; the private sector may be able to offer a higher wage or more non-
wage benefits. It is a concern of the public sector that as relative wage decreases, so will the
quality of employees. In the 1988 paper Public Sector Pay and Employment Reform, Barbara
Nunberg focuses mainly on developing countries in her analysis of how the World Bank has
influenced reform. The World Bank suggests selective wage increases to attract better
employees. This correlation between relative wage and quality of worker is not unique to the
developing world. It is also true of Great Britain.
Since the mid 1970s, public sector investment in Great Britain has fallen in most sectors.
Those with significant pay decrease include manual workers, nurses, teachers and general
administrators, while police, related groups, and medical staff have not suffered similar wage
decrease. Male teachers’ test scores are significantly lower in the mid 1990s than in the mid
1970s, which correlates with the fall in compensation. Over the same time period, there was no
marked decrease in test scores for those groups whose relative pay did not fall. (Nickell)
Nunberg also discusses the impact of non-wage incentives on public sector employees.
She states that these incentives could include housing or housing credits, family and health
benefits, and pension plans. A 2003 paper by Simon Burgess and Marisa Ratto discusses the
effects of public sector incentive benefits in multiple countries around the world. They warn that
there are far more examples of similar programs in the private sector, but provide several public
sector examples. First, an incentive system for the Brazilian tax collection authority is examined.
Based on performance, Brazilian tax collectors could earn up to twice the mean annual wage.
After implementation, fines collected increased by 75 percent.
Performance pay for teachers has been looked at more intensely than any other public
sector. One study examined a Dallas, Texas, US school district. Rather than awarding bonuses to

17. individual teachers, bonuses were awarded to each school employee (teachers, administrative
staff, cleaning crews, etc…) based on a school wide improvement in performance. They found
that about 20% of schools met their goal and were awarded bonuses every year. A 2002 paper by
Lavy studied two different incentive schemes in Israeli schools. Both were tournament based. In
the first, schools competed based on average performance and bonuses were awarded to all the
teachers of the winning school. In the second, teachers whose students were in the top 25% of
test scores were awarded large bonuses. Both incentive schemes showed positive results in
performance. (Burgess)
Despite the positive results shown in schools, performance schemes have generally been
shown to be more effective in the private sector. (Burgess)
Today, the United States’ wage structure reflects what is generally expected. Highly-
skilled work will fetch a much higher price in the private sector than the public sector. Another
way to state this is to say that an individual in the highest echelon of earners in the public sector
is likely to transfer to the private sector, while an individual earning a high wage in the private
sector is not likely to move to the public sector. The implications of this are not good for the
public sector: the most qualified employees are most likely to seek public sector positions. In
addition, the American public sector has shown increased wage compression relative to the
private sector. In summation, highly skilled workers in the American labor market are more
likely to seek work in the private sector due to wage inequality and wage compression. This is an
issue faced in all economies. In order to attract the most skilled workers, the public sector must
do one of two things: mend these weaknesses, or attract workers with other incentives. (Borjas)
Both developed and developing countries tend to face a similar list of challenges in the
public sector pay structures. The variability of structures is not all that wide among countries. We
can see many similarities between Ghana’s single spine structure and many of Europe’s public
sector pay structures, as well as vast differences. We also observe that the challenges faced by
most public sectors tend to be shared; that includes preventing wage compression and salary
erosion, attracting workers to the public sector, and maintaining productivity in addition to others
mentioned.

18. Conclusion
Public Service pay reform requires a commitment by all stakeholders, institutional heads,
employees, and labour unions, in order to realize their effect and create lasting change. In 2007,
Ghana went through a major reform in the measurement, evaluation, and management of the pay
and grading structure for public servants across all sectors of government. The reform was
considered a landmark change, because of its consultations with labour unions, extensive job
evaluation exercise, and overall ability to fix past failures. However, just six years later, that
belief is diminishing. Institutions whose salaries are overdue have called nationwide strikes, and
there is a loss of faith in the ability of the government to commit the necessary resources and
follow through with the policy in order to truly correct the past pay inequities.
Future research on this subject should focus on how the policy was implemented and
evaluation over the next coming years, especially given the current political situation.
Additionally, research should investigate placement of jobs on the salary structure as well as the
determination of market premiums and inducements.
The future of the public sector in Ghana is dependent on enacting changes to the
implementation of the SSSS. In a statement to the press, Andy Asamoah suggested the creation
of an independent committee to work in a limited period and draft recommendations for the
government to move forward with the implementation of the policy ("Let’s have truce between
govt, labour”). However, this solution requires commitment by the heads of institutions and
political officers in order to ensure public support and belief in this being an effective answer.

19. Sourced: Controller & Accountant's General Department (2011).

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