Prof. Oteng-Abayie: Understanding wage and salary differences in the Public Sector; wage differentials through the lens of labour economics

Public-sector salary disputes often begin with a comparison: one group earns more than another. Yet a pay gap, by itself, does not establish unfairness.

Labour economics asks a deeper question: what explains the difference, and is that explanation defensible?

This question should guide discussions about remuneration across Ghana’s public services and within its universities.

Fairness requires consistent principles, reliable evidence and a willingness to correct unjustified disparities.

Why salaries differ

Labour economics identifies several factors that can contribute to differences in pay, including relevant skills, training, experience, responsibilities, working conditions, labour-market scarcity and bargaining outcomes.

These factors do not automatically justify a pay difference; they must be connected to the work performed and assessed consistently.

The human-capital explanation emphasises investment in education and professional development. Training can take time, involve direct costs and require years of forgone earnings.

Employers may therefore pay more for expertise that improves performance or is difficult to acquire. However, education does not guarantee a particular salary, and the relationship between qualifications and pay depends on the job, the labour market and the institution’s pay system.

In Ghana’s public universities, for example, a medical specialist teaching in a university hospital, a professor supervising doctoral research and a chartered accountant responsible for institutional financial reporting may all require advanced qualifications.

Their remuneration should nevertheless reflect the distinct knowledge, risks and responsibilities attached to their jobs. The existence of a master’s degree, PhD or professional certificate alone cannot determine the appropriate salary.

Qualifications matter partly because of the knowledge and capabilities a job requires. Holding the same degree does not necessarily mean performing work of the same value; holding different degrees does not automatically establish a particular pay hierarchy.

The relevant assessment must connect qualifications to actual duties, complexity, judgement and accountability.

Evaluate the work behind the title

Job titles are useful administrative labels, but they are imperfect measures of job value. Comparisons based solely on titles such as professor, director, registrar or head of department can conceal substantial differences in duties.

The Fair Wages and Salaries Commission’s published material describes job evaluation in terms that include knowledge and skills, responsibility, effort and working conditions.

These factors provide a more substantive basis for comparison than titles or educational certificates alone. (FWSC, “Determination of SSPP”)

In practice, a public university could apply such factors when reviewing whether the work of a procurement director, university librarian, laboratory manager and academic department head has been evaluated consistently.

The review could examine the scale of budgets managed, the number of staff supervised, the consequences of error, the level of professional judgement required and the conditions under which the work is performed.

Within universities, academic work can encompass teaching, research, postgraduate supervision, assessment and professional service.

Administrative and professional work can encompass financial management, admissions, legal compliance, human resources, procurement and institutional governance. Each should be assessed on its actual requirements.

For example, a lecturer teaching large undergraduate classes, supervising graduate students and conducting externally funded research may have a different job profile from a lecturer whose principal responsibility is clinical teaching or field-based extension work.

Similarly, an administrator managing payroll and statutory reporting may face different accountability requirements from an officer handling routine records.

Universities depend on these contributions working together. Their interdependence establishes the importance of each function, while job evaluation helps determine whether particular roles warrant comparable or different remuneration.

Scarcity can justify a premium

Workers with similarly evaluated jobs may face different external employment opportunities. An institution may struggle to recruit or retain particular specialists because other employers offer substantially better compensation.

A market premium can help address that difficulty, but its economic justification is the recruitment or retention problem it is intended to solve. A premium should not be treated as proof that an entire occupational group is inherently more valuable than another.

The FWSC’s published material lists market premiums for scarce and critical skills among the components of the Single Spine Pay Policy and refers to labour-market information in discussions of such premiums. (FWSC, “Components of SSPP”; FWSC, “FAQs”)

In Ghanaian universities, possible examples could include specialists in nuclear physics, actuarial science, cybersecurity, petroleum engineering, artificial intelligence, medical subspecialties or specialised laboratory sciences. These are examples, not verified findings that each field is scarce in Ghana. A university should demonstrate scarcity through evidence such as repeated failed recruitment exercises, prolonged vacancies, resignations to private-sector employers, competing offers or credible salary data from comparable institutions.

A defensible premium should therefore be supported by evidence: persistent vacancies, unsuccessful recruitment, staff turnover, competing offers or reliable salary comparisons. The same evidentiary standard should be available to every occupational group.

Universities could establish a joint review mechanism involving management, recognised staff associations, the university council, the FWSC and relevant government agencies, subject to their legal mandates. Such a mechanism could identify scarce skills, recommend time-limited premiums and publish the criteria used.

Premiums should not become permanent entitlements without periodic review.

Scarcity can change. A premium introduced to recruit information-security specialists, for instance, should be reconsidered if the local supply of qualified professionals expands or if the university’s recruitment difficulties disappear.

Responsibility and working conditions matter

Labour economics recognises compensating wage differentials: additional pay associated with demanding or undesirable job conditions. These may include hazards, inconvenient hours, difficult locations or exceptional burdens.

The theory predicts that such conditions can affect pay, but it does not require every difficult condition to receive a particular allowance.

In Ghana, a university may need to recognise conditions faced by staff working in laboratories with chemical or biological hazards, lecturers undertaking extended fieldwork in remote communities, security personnel working night shifts or technical staff maintaining essential systems outside normal working hours.

Any allowance should be linked to documented conditions and appropriate health-and-safety assessments, not simply to occupational status.

Responsibility allowances require a similarly clear explanation. They should reflect additional duties and accountability, with terms specifying who qualifies and for how long.

For university leadership roles, a useful distinction is whether managerial responsibility forms part of the substantive job or is added through a temporary appointment.

A dean, provost, director or head of department may receive an approved responsibility allowance while holding that office, but the allowance should normally cease or change when the appointment ends, subject to the applicable rules.

This distinction helps determine how responsibility should be recognised and prevents the same duty from being counted twice.

University councils and governing statutes can support this approach by defining appointment periods, reporting responsibilities, delegated authority and the conditions for payment.

The Auditor-General’s constitutional and statutory audit functions support the broader principle that public expenditure should be properly authorised, documented and accountable; they do not, by themselves, prescribe the design of university allowances.

Compare the whole package

Basic salary is only one part of remuneration. A meaningful comparison should examine allowances, employer pension contributions, benefits in kind and other employment-related payments.

For example, two employees on similar basic salaries may receive different total compensation because one has an approved responsibility allowance, accommodation support, vehicle-related benefits or access to a university residence, while the other does not. These differences should be identified before concluding that one occupational group is systematically favoured.

The comparison should also distinguish recurring compensation from reimbursement of expenses. A payment intended to cover an actual work cost is not automatically an equivalent increase in disposable income. Travel reimbursement for fieldwork, for example, should not be treated in the same way as a general salary increase.

Comparisons must align relevant characteristics, including grade, salary step, experience, duties and working time. Otherwise, an apparent occupational pay gap may partly reflect differences in the composition of the groups being compared.

Ghana’s public universities could improve transparency by publishing, for each approved grade or role, the applicable salary range, standard allowances, eligibility conditions and whether each payment is pensionable or reimbursable, subject to applicable confidentiality and legal requirements. This would help staff associations and management compare like with like and reduce disputes based on incomplete information.

Bargaining explains outcomes, but does not settle fairness

Public-sector wages emerge through institutions, budgets, administrative decisions and collective bargaining. In Ghana, negotiations may involve the government, the Fair Wages and Salaries Commission, recognised staff associations, university management and governing councils, subject to applicable public-sector pay policies, collective agreements and budgetary approvals.

Groups differ in organisation, negotiating capacity, outside options and the disruption associated with withdrawing their labour. Academic staff, senior staff, junior staff and unionised workers may therefore secure different outcomes at different times.

These factors can influence negotiated outcomes. Labour economics can explain that influence without treating every resulting differential as fair.

Equally, an improvement secured by one group does not automatically establish another group’s entitlement to the same payment. The proper inquiry concerns comparable job value, eligibility conditions, labour-market evidence and applicable agreements.

A negotiated benefit may be justified, insufficient or excessive. Its existence alone cannot answer which.

A practical institutional mechanism would be to require that new allowances or salary adjustments be accompanied by a written rationale, costing, eligibility rules, duration and review date. University councils and the FWSC could then assess whether the proposal is consistent with applicable national pay policy, the Single Spine Pay Policy where applicable, collective agreements and the university’s financial capacity. The precise approval requirements would depend on the governing legal and administrative framework.

Public-service value is difficult to measure

Universities and other public institutions produce benefits that are not fully captured by revenue or easily counted outputs. Teaching quality, reliable records, sound financial controls and research contributions can have effects that emerge over many years.

Consequently, simple performance indicators can distort incentives. Paying principally for publication counts may neglect research quality or teaching. Rewarding administrative processing speed may undermine accuracy and compliance.

Performance assessment should recognise quality, teamwork and outcomes that staff can reasonably influence.

For Ghanaian universities, this could mean combining student-learning evidence, peer review, research quality, successful postgraduate completion, community engagement, timely financial reporting and compliance with procurement and audit requirements.

Ghana’s tertiary-education regulatory and quality-assurance framework can provide relevant reference points, but the specific standards and responsible bodies should be identified for each institution.

Performance systems should avoid rewarding or penalising staff for outcomes controlled mainly by funding shortages, delayed procurement or inadequate staffing.

What should guide reform?

A credible remuneration review should combine updated job evaluation, evidence on recruitment and retention, and a transparent comparison of total compensation. It should also provide a process for challenging inaccurate job descriptions, inconsistent grading and unjustified exclusions.

In Ghana, this process could involve periodic reviews by university human-resources directorates, management committees, staff associations, governing councils and the Fair Wages and Salaries Commission, within their respective mandates.

Job descriptions should be updated when responsibilities change, and staff should have access to an appeal or review procedure where they believe their roles have been incorrectly evaluated.

The principle of equal remuneration for work of equal value offers an important foundation. The International Labour Organization explains that different kinds of work can be compared through objective job evaluation.

Its Equal Remuneration Convention, 1951 (No. 100), addresses equal remuneration for men and women for work of equal value. (ILO, “Equal remuneration for work of equal value”)

For Ghana’s public universities, the broader policy challenge is to combine internal equity with the capacity to attract and retain the expertise institutions need. Fiscal constraints shape what government can afford, but limited resources still require fair allocation.

A practical reform programme could therefore include:

regular, evidence-based job evaluation using the FWSC framework;

publication of salary structures, allowances and eligibility rules, subject to applicable legal and confidentiality requirements;

labour-market surveys for scarce-skill premiums;

time limits and review dates for responsibility and market allowances;

transparent procedures for staff to challenge grading decisions;

joint consultation with recognised staff associations;

independent review of gender, occupational and institutional pay gaps; and

annual reporting to university councils on remuneration, vacancies, turnover and the cost of allowances.

A fair salary structure can contain differences. What makes it credible is that those differences have clear reasons, supporting evidence and consistent rules.

That should be the standard applied to every occupational group in Ghana’s public services and universities.

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