Ghana’s unemployment rate is projected to remain at an average of 4.0% throughout 2024, according to a recent report by Fitch Solutions. This drift is expected to persist into 2025 and 2026 as the country continues to suffer longstanding economic challenges.
The unemployment rate has been on a slow but steady rise since 2017, and Fitch Solutions warns that this is likely to continue over the medium term, likely extending further into the future.
One of the key factors behind Ghana’s labour market difficulties is its low life expectancy, which currently stands at approximately 64.3 years. This issue is closely tied to insufficient government investment in healthcare and the ongoing prevalence of water-borne diseases, as well as chronic conditions like HIV/AIDS. The reduced life expectancy directly impacts the size of the workforce, limiting the country’s labour potential at a time when economic recovery is crucial.
Compounding the issue is a massive shortage of highly skilled workers within the country. This shortage has forced many employers to look beyond Ghana’s borders to fill positions, increasing the challenges facing the domestic labour market. The reliance on imported talent stresses the need for more robust investment in education and vocational training to develop a more capable and competitive workforce.
In the broader context, Fitch Solutions notes that Ghana’s households and consumers continue to feel the effects of global economic disruptions caused by the reopening of economies following the COVID-19 pandemic Inflationary pressures remain a major concern, driven by a combination of demand-pull and cost-push factors that have strained the purchasing power of Ghanaian families.
Amid these challenges, the report emphasizes that central banks, both in Ghana and globally, have responded with some of the most aggressive interest rate hikes in history in an effort to curb inflation. While this has had some success in cooling off overheated markets, it has also devalued debt accumulated during the low-interest period of 2015-2019.
Fitch Solutions highlights that economic recovery will require careful balancing of inflation control measures and efforts to stimulate job creation.
