The State of Market Premium Value in Ghanaian Public Universities

Abstract

Market premium was introduced as part of single spine pay policy package which aims at attracting and retaining critical skills which are in short supply. The study aims at determining both the current and future value of the market premium. Secondary data was collected for this study. The actual percentage of base pay increments from 2012 to 2023 was compiled and averaged for purpose of basic salary and market premium projections. The approved exchange rate of US dollars for book and research allowances from the Ministry of Finance was used to ascertain the amount of dollars the Market premium could exchange for in 2012 against 2023. The data were analysed using Microsoft excel. The study found that the MP has lost its value. The current rate (the year 2023) of the market premium is 37.46% against 114% in the year 2012. The study projected the MP for the next 5 years and found that by the year 2028 the rate of Market premium on basic salaries is likely to be 21.61%. Alternatively, the foreign exchange rate for book and research allowances was also used and found that the amount of the Ghanaian cedi has depreciated drastically against the US dollar. As of 2023 the amount of dollars the 2012 MP of could be exchanged for is $188.22 at the current exchange rate of $10.6198. The study recommended that government should restore the MP value by reviewing and placing the rate of 114% on the current basic salary.

Keywords: Single Spine Pay Policy, Market Premium, Equity theory. Expectancy theory, Time value of money, currency depreciation.

DOI: 10.7176/RJFA/14-14-09

Publication date:July 31^st 2023