Workers received only 19.46% of the wealth created in Angola in 2024, representing the second worst record since 2002. This indicator suggests a loss of purchasing power and an increase in inequality in a country that lives side by side with high inflation, unemployment, and informality, but also with the wealth generated by oil that remains with large multinationals.
These data are included in the Annual National Accounts report recently published by the National Statistics Institute (INE). GDP can be analyzed through three lenses: the production approach, which is the sum of the gross value added from all sectors of the economy; the income approach, by adding all earnings obtained by economic agents, from wages to profits and interest; and the expenditure approach, which is the result of the sum of household consumption, public spending, investment, and exports, deducting imports.
In the last 10 years, national GDP has shown an average growth of only 0.6%, well below the average annual population growth of around 3.1%. Since the economy failed to create the necessary formal jobs to keep up with population growth, the way out for most Angolan families ended up being informality (80% of jobs are informal). High inflation and the business environment discourage investment, so unemployment is also high. Thus, following market logic, where there is more demand than supply for jobs, a low-wage policy prevails, which not only prevents the majority of the population from escaping poverty but also leads to weak savings.
It is partly for this reason that, from the income perspective, workers’ compensation as a share of GDP has been falling, reaching last year the second worst record of this century.
And if the wealth generated in the country barely reaches the workers, it means that it is being retained by capital, that is, by companies. The Gross Operating Surplus/GDP (which includes profits, rents, and interest) rose from 71.30% in 2015 to 77.82%, which means, according to an analysis by the former deputy governor of the BNA, Pedro Castro e Silva, “greater appropriation of added value by capital, indicating income and profit concentration, especially in periods of low job and wage growth.”
That is, in periods of macroeconomic instability — which in practice has been the country’s day-to-day in recent years — capital has been significantly rewarded, while the purchasing power of wages has been falling.
Just to give an idea, for example in Portugal the share of workers’ compensation in GDP is around 47.2%, while in Brazil it is around 30% and in South Africa 50%. It should also be noted that in Angola, about a third of GDP results from the oil industry, which is capital-intensive, and therefore retains more value. In fact, this is a trend that also occurs in other oil-producing countries. Just look at data from the International Labour Organization (ILO), where the average for Arab countries, although higher than Angola’s, is much lower than in other regions of the world (see chart), especially in more developed and diversified economies.
Even so, looking at these data it is possible to conclude that inequality keeps growing in the country. “With a reduction in the supply of jobs, employers can impose themselves and keep a larger share of income. In theory, this would allow for reinvestment but, if we consider that private (and even public) investment is decreasing, we can believe that this reinvestment is not happening,” highlights economist Fernandes Wanda, suggesting, therefore, that income is being transformed into profits for companies.
The coordinator of the Social and Economic Research Center at the Faculty of Economics (UAN) also adds: “These data show the danger of having politicians who are also businessmen. The State, as a whole, and the workers are the ones who lose.”
According to researcher Francisco Paulo, although there is no universally accepted “ideal percentage” for income distribution, most economists consider a labor share between 50% and 65% of GDP to be healthy. “Values persistently below 30% are generally associated with high inequality, low domestic demand dynamism, wealth concentration, social and political fragility. Angola has one of the lowest labor shares of GDP in the world, which places it outside the standards seen even in developing economies,” he stresses.
The economist also considers that a large part of the income generated is being appropriated by companies — often multinationals — and not redistributed internally. This may occur due to dominant sectors with low labor intensity, such as oil and mining, but also due to capital flight and profit repatriation abroad, as well as low tax progressivity, which does not offset inequality at its origin.
To reverse this scenario, Francisco Paulo believes that a “serious and credible investment in education and workforce qualification is needed, to increase productivity and justify higher wages,” but also in diversifying the economy, promoting labor-intensive sectors such as agriculture, manufacturing, and services. Francisco Paulo also defends valuing the minimum wage and collective bargaining to increase the wage bill and strengthen transparency and the fight against capital flight, ensuring that the capital surplus contributes to internal development, with appropriate incentives.
Economist and director of the Center for Studies and Scientific Research (CEIC) of the Catholic University of Angola, Alves da Rocha, who has been warning for several years about these issues of inequality in wealth distribution in Angola — as expressed in several institutional reports — believes that “the Angolan economy cannot continue to function and survive based on low and deteriorating wages year after year.” And he adds: “The country cannot continue like this. It cannot continue living on low wages that generate poverty, or at least that are not capable of facilitating poverty reduction or its stabilization.”
To reverse this scenario, there is a long road ahead, which must include workforce qualification to increase productivity. And the higher the productivity, the higher the remuneration should be. “This qualification of the workforce is a responsibility of companies, but also of the State, of the education system, of the State’s entire education system. And in this regard, the combination of private and public responsibilities in terms of education and productivity increase has never happened,” he emphasizes.
According to the Annual National Accounts 2015–2024 now published — a report that the INE had not released since 2019 — it is possible to verify that domestic savings and investment levels have seen a sharp decline, reaching in 2024 the lowest values of the decade. Gross savings fell to 15.77% of GDP in 2024 after peaking at 30.68% in 2018, while the investment rate dropped to 10.39%, less than half the value recorded in 2015.
According to Pedro Castro e Silva’s analysis, regarding gross savings — which is the portion of disposable income from households (savings), companies (profits reinvested into capital), and the government (fiscal surplus) that is not consumed — several factors are likely behind this trend. These include, beyond high inflation, issues such as increased public debt and negative expectations about the economy. When combined with the falling Gross Savings/Gross Disposable Income ratio, this “reflects the difficulty families and companies have in saving, which may be linked to stagnant income and increased consumption to maintain living standards.”
In fact, the issue of household consumption is seen by CEIC and Business Research Unit (BRU) researcher from ISCTE (in Lisbon), Francisco Paulo, as one of the alarming signs in the INE report. The average percentage of household consumption in GDP in Angola rose from 41% (2002–2019) to 61% (2020–2024). This increase may seem positive, but it contradicts the low labor compensation. This suggests household indebtedness or the use of savings, inflationary pressure that forces greater spending to maintain the standard of living, and the replacement of public investment with private consumption, which may compromise future growth.
Thus, when the accounts are done, the low share of wages in GDP and low household savings reflect an unequal country, in which the wage bill is insufficient to sustain domestic consumption, limiting demand-based growth. The economy becomes vulnerable to external shocks, as it depends more on oil exports than on domestic consumption, and informality and structural unemployment tend to be high because the labor market is not sufficiently valued.
Therefore, when there is high demand for formal employment, as is the case in Angola, wages naturally decrease, which ends up harming the economy. This is because the greater the share of GDP income generated by workers, the higher the consumption, which boosts the internal market. And the greater the internal market, the more incentive there is for capital to invest, increase production, and generate employment. Without a domestic market, companies divert profits to shareholders or investments in public debt.
Doubts about the ‘adjustment’ of GDP
The methodological update process of INE’s National Accounts, which includes the migration of the reference year from 2002 to 2015 and from the 1993 National Accounts System to that of 2008, brought substantial changes to national GDP measured at current prices, since it adds an annual average of USD 16.5 billion more than the methodology in force until the end of 2024. The new methodology removed oil from the first place among the sectors with the most weight in GDP and doubled the weight of agriculture and livestock. These changes not only pushed GDP up but also softened the recessions seen between 2016 and 2020.
However, several specialists warn of the lack of transparency in this GDP reassessment. “GDP took a significant leap in this last period but with a fall in savings and a fall in investment. And the question I ask is: in what way, then, did GDP grow? How did it grow? Just with labor? Just with manual workers? Was there no investment in this tremendous GDP growth rate? Looking at classical development theory, there are three fundamental factors for economic growth: land, labor, and capital. Now, if unemployment is increasing, I don’t know whether land use, particularly in agriculture, has increased or not, but if unemployment is high, if the investment rate is falling, if the savings rate is falling, then the question I ask is: what were the factors that justify this intense economic growth that INE identified?” asks Alves da Rocha.
The director of the Scientific Research Center of the Lusíada University of Angola (CINVESTEC), Heitor Carvalho, also warns of insufficient information and the lack of transparency regarding how INE calculates GDP. And he gives examples: “the income distribution of a distorted total presents only 3 categories: employee compensation, which must correspond to some calculation of formal employment that needs to be understood (without publishing the methodology this is impossible); taxes and subsidies (based on GDP and dividing income without this category, which is not income); and what remains, identified as mixed income (company profits, informal labor income, informal company income, interest, rents, notably concession rights from ANPG, etc.). It’s impossible to extract much from that.”
25/07/2025
