Former finance minister, Dr Kwabena Duffuor
Ghana’s unemployment rate is at a high
Dr. Kwabena Duffour delivered a public lecture
High and rising inflation increases the cost of living
Ghana’s current high rate of unemployment started rising after the Mills’ administration, and during the reign of his predecessor, John Dramani Mahama, a former Minister of Finance, Dr. Kwabena Duffuor, has stated.
According to him, while the John Evans Atta Mills administration was able to significantly reduce the rate of unemployment in the country between 2009 and 2012, his predecessor’s reign contributed to worse figures for employment, reports 3news.com.
“Again, through effective real sector policies, unemployment was tamed under the Mills NDC Administration and I was the Minister of Finance and Economic Planning. The total unemployment rate which stood at 10.4% in the year 2000 witnessed a declining trend to 5.3% by the end of 2010 and further declined to 2.2% by the end of 2013. However, after 2013, total unemployment rate saw another upward swing, increasing sharply to 6.8% by the end of 2015.
“It is therefore clear that the stellar performance of real GDP growth in 2009–2012 was a significant factor that led to lower unemployment level and which further led to job creation during 2009–2012 period,” he said.
He also spoke about the high rates of inflation in the country.
“High and rising inflation increases the cost of living at a fast pace, thereby eroding people’s real incomes and savings. By fueling wage pressures and raising the cost of other production inputs, it also increases the cost of doing business. Furthermore, rising inflation forces up interest and lending rates, since savers—whose surplus funds are lent to borrowers—naturally demand a higher reward for deferring consumption to the future. Higher lending rates then lead to the cancellation of otherwise viable investments, with negative effects on economic growth and employment generation.
“Historically, Ghana has experienced these effects of inflation in their most destructive forms, as the country’s post-independence economic history is marked by many episodes of runaway inflation, including prolonged periods of hyperinflation in the 1970s and 80s.
“Because Ghana relies heavily on imports to meet its consumption needs, a rapidly depreciating exchange rate is a major source of inflation. In addition, given the country’s rapid build-up of foreign debt, which accounts for about half of total public debt, a sharply weakening exchange rate significantly increases the size of the foreign debt and the cost of servicing it in domestic currency terms. In fact, research conducted by the Institute for Fiscal Studies has shown that exchange rate depreciation is a significant driver of Ghana’s public debt dynamics, as it accounted for almost 30% of the growth of public debt between 2006 and 2019,” he added.
He made these known in a public lecture in Accra on Monday, November 29, 2021.