Ghana is a lower-middle-income country but despite its growing economy, the country still faces challenges such as high unemployment, underemployment, and poverty. The labour market in Ghana is characterized by a large informal sector and a shortage of skilled workers in certain industries. The country has a growing economy and a young, dynamic labour force.
However, the COVID-19 pandemic has highlighted the need for Ghana to diversify its sources of foreign exchange earnings and strengthen its balance of payments. One solution to these challenges is to embrace the opportunities of exporting labour.
One of the main benefits of exporting labour is increased foreign exchange earnings. Remittances from workers abroad can significantly contribute to the country’s foreign exchange earnings.
Increased remittances
According to the World Bank, remittances to Ghana rose to $3.6 billion in 2020, representing nearly 10% of the country’s Gross Domestic Product (GDP).
This influx of foreign currency can then be used to import goods and services that are in high demand but not readily available locally, improving the country’s balance of trade and overall economic stability. This can help to boost the country’s economy and improve its competitiveness in the global market.
Exporting labour can also improve the country’s balance of payments by reducing the trade deficit and increasing the country’s foreign currency reserves.
This can help to stabilize the local currency and reduce the risks associated with currency fluctuations. Remittances from workers abroad can play a crucial role in financing the country’s imports, reducing its reliance on foreign aid or loans.
Job creation
In addition to these economic benefits, exporting labour can also create employment opportunities for workers and contribute to the country’s economic growth.
This is particularly important in light of the COVID-19 pandemic, which has had a devastating impact on economies and labour markets around the world. By exporting labour, Ghana can increase its ability to generate foreign exchange earnings and support job creation at home.
Moreover, working abroad can provide opportunities for workers to gain valuable skills and experiences that they can later use to improve their job prospects or start their own businesses. This can help to address the shortage of skilled workers in certain industries and contribute to the country’s overall economic development.
While exporting labour has many benefits, there are also some challenges that must be addressed. For example, exporting labour can result in brain drain.
Brain drain is a common challenge associated with exporting labour. This refers to the loss of skilled workers from a country, which can negatively impact the country’s economy and competitiveness.
With the country’s most skilled and talented workers leaving to work abroad, it could can lead to a shortage of skilled workers in the country and impact the country’s ability to sustain its economic growth.
Another challenge is the exploitation and abuse of workers, which can lead to human rights violations and damage the reputation of the country.
Exploitation and abuse of workers are serious concerns when it comes to exporting labour. Workers may be subjected to poor working conditions, low wages, and limited opportunities for advancement.
Remittance dependency is another concern. Remittances from workers abroad can play a crucial role in financing the country’s imports, but over-reliance on remittances can lead to remittance dependency.
This is because, the country becomes reliant on the foreign exchange earnings generated by remittances, which can be subject to fluctuations. This can limit the country’s ability to generate its own income thereby becoming reliant on external factors for economic stability.
Investing in skills development
To address these challenges, the government must take a comprehensive approach to export labour. For example, the government can invest in education and skills training programs to provide workers with the necessary skills for the international job market.
The government can also work with host countries to ensure the protection of workers’ rights and well-being, and provide support for workers who experience exploitation and abuse.
To reduce the risk of remittance dependency, the government can encourage the development of local industries and support job creation
The COVID-19 pandemic has highlighted the importance of diversifying the country’s sources of foreign exchange earnings and strengthening its balance of payments.
Exporting labour is a solution to these challenges and provides many benefits for the country, including increased foreign exchange earnings, improved balance of payments, job creation, and skill development.
However, the challenges of exporting labour must also be addressed, including brain drain, exploitation and abuse of workers, and remittance dependency.
The government must take a comprehensive approach to export labour, including investing in education and skills training programs, working with host countries to ensure the protection of workers’ rights, and providing support for workers who experience exploitation and abuse.
In conclusion, Ghana should embrace the opportunities of exporting labour as a means of improving its economy and increasing foreign exchange earnings. With a comprehensive approach, the country can reap the benefits of exporting labour while minimizing the negative impact of this strategy.
Cover Photo by Pius-Imue Bebari via Iwaria
