SMALL‐SCALE INDUSTRY AS A SPONGE? EMPIRICAL SURVEY IN THE CENTRAL REGION,GHANA

It has been posited that small‐scale industry – businesses with less than 30 workers – provides a large share of employment and income in Ghana. This paper examines the proposition that while such enterprises in the informal sector are said to act as a sponge to soak up surplus labour in marginal activities, they are unprofitable. Using data from a survey in 1998 of 175 micro and small‐scale enterprises in the Central Region of Ghana, the paper also confirms problematic aspects of employment in this sector including the lack of formal contracts, irregular pay, low remuneration, non‐existent social protection and only marginal employment growth. The implication is that the small‐scale industry sector is not economically sustainable in its present form in Ghana.