THE LABOUR UNIONS SHOULD TREAD CAUTIOUSLY. OTHERWISE……

In recent times, there have been labour agitations and demands for government to increase salaries of public sector workers. Some have gone on demonstrations while others have given ultimatum in September for government to meet their demand. Government is making all efforts at reaching an amicably settlement with the Union Workers. I also have a little advise to share with the Union Workers and Ghanaians in general.

I have heard some of the justification as put out by the striking workers and was surprised by some of the similitude they drew. For instance, they said Angela Merkel, the Germany Chancellor is reported to have said that you cannot pay politicians more than the teachers who taught them. However, they failed to add that in Germany, many of their citizens cue to pay additional taxes to government when their income exceeds that of the taxman’s estimates. Here in Ghana, many people own either residential or commercial properties or both and rent them out. But they neither pay property rate nor rent tax to government.

Another justification was that Senior Professors take less than their less educated District Chief Executives (DCEs). Probably they did not factor in the responsibility and risks allowances of being the President’s Representative in the district. Security issues, road issues, school fees, water shortages, accidents and other issues affecting the departments and agencies in the district are reported to the District Chief Executive. the Professors at the universities do not have similar responsibilities. So, we must make our comparison in proper context.?

I do sympathise with the workers for the Covid-19 induced increasing cost of goods and services without the corresponding increases in compensation. However, the priority of government is to save lives and revive the economy. As the President famously said “We know how to bring the economy back to life. What we do not know is how to bring people back to life”.

The Union Leaders in my opinion, were very pragmatic under the current circumstances when they negotiated the 4% increment in salary on the assurance that government will not embark on any retrenchment, rather it will continue recruitment into the Civil and Public sectors, ensure prompt release of workers tier-2 pensions as well as ensure that the entire public sector was going to be vaccinated against Covid-19 within 2years among others. To me, this was the most patriotic negotiations that the leaders of the Labour Unions could have entered into.

Reports from most parts of the world indicated that millions of workers lost their jobs. But in Ghana, Civil and Public sector workers especially, teachers and lecturers kept their jobs and paid all their entitlements despite the lockdowns and the shift systems.

The Finance Minister in the 2021 Budget presentation said that Government revenues in 2020 were down by about ￠13.6 billion cedis while, at the same time, unexpected and unavoidable expenditures went up by ￠11.7 billion cedis. It is also estimated that government could lose close to ￠18 billion cedis in revenues in 2021. Owing to the above, how could workers unions be demanding higher salary increment?

There is evidence that prior to Covid-19 pandemic, government had increased salaries of Public Sector workers by 12.5%, 10%, 11% and 12% for 2017, 2018, 2019 and 2020 respectively. It should therefore be understandable why government cannot meet workers’ demands in 2021.

Government’s commitment to austerity measures

Government is not insensitive to the challenges facing the country and has already committed to austerity measures by reducing the number of ministers from 126 to 86. In addition, all Article 71 officers are not to benefit any salary increment for 2021. Foreign travels by government officials have also been reduced significantly. All these measures contribute to making resources available for spending in critical areas of the economy.

The challenges of the economy are contained in my recent article attached titled “Fiscal Policies in the 2021 Budget Statement and Economic Policy are necessary evil”. Kindly read the full article to appreciate my drift. (https://m.facebook.com/story.php?story_fbid=10226290516666585&id=1151199258 .)

Do some Ghanaians have short memories?

It is important to note that before the coming into power of the current administration, Ghana was under an IMF programme which dictated that employment in the public sector be frozen for 4years, we were in Dumsor for 4years and youth unemployment according to the Bretton Woods institutions was about 48% (it is said to be around 12% now). Teachers and nurses who had completed schools since 2012 were not posted and those who were posted were not paid for more than 12months.?Teachers and nurses’ trainees as well as Arabic instructors had their allowances cancelled. Average school fees which were about ￠3,600.00 per child per annum had to be paid by parents and guardians. School feeding only covered a limited number of pupils, LEAP and the many other interventions implemented by the previous administration were in limited scope and funds were not even released to take care of them.

Have we soon forgotten the psychological trauma our unemployed youth went through prior to 2017? The hell our ladies went through, and some had to sacrifice their dignity to survive, and the tantrums thrown at parents by frustrated unemployed graduates? Have we soon forgotten the era where people worked for 3years but got paid for only 3months? The list goes on and on. Many of these burdens had to be carried on the shoulders of few workers who had regular income and our Members of Parliament (MPs) who desperately wanted to save their jobs.?

Government indirect improvements in the welfare of Ghanaians.

Even though government may not have increased salaries of workers directly, but the implementation of certain key policies has indirectly reduced the burden on workers.

When the Finance Minister introduced 35% PAYE on incomes above ￠10,000.00 in the 2018 Budget Statement and Economic Policy, some of us argued that Ghana was not a welfare state and that the welfare functions were played by citizens who earn decent income. We further argued that most Ghanaians spend close to 30% of their earnings to support their extended families and friends who have no means of earning income. Hence, if the 35% PAYE was maintained, it amounted to double taxation which was not fair. As a result, the policy was subsequently revised to bring relief to workers in that category.?

In the same vein, I will use the same welfare argument to bring workers attention to some of the government policies that have brought enormous financial relieve to most parents and workers which can be equated to salary increments, although not all may have benefited.

Akufo-Addo ‘Obia N Nya Kakra’ (Everyone must get small) Economic Model

The economic model being pursued by the Akufo-Addo’s government is to ensure that everyone or their relation/s get a small fraction of benefit from the state. In addition, it is meant to solve the national security threats posed by youth unemployment and psychological/mental trauma our young people go through when they stay at home after national service for a long time. Finally, the economic model being pursued by the government is purely ‘Keynesian’ meant to engender consumption through domestic spending. Hence, the reason behind the following interventions that have resulted in spreading money across a large proportion of the population to make it easier for them to go out and spend to ensure the economy grows. No wonder, Ghana has been among the fastest growing economies in the world since 2017 even under Covid-19 Pandemic.?

I will just enumerate a few of the interventions:

·??????1.2 million beneficiaries of Free SHS that could have costs parents about ￠3,600 annually per child.

·??????About 80,000 District Level scholarships granted for the period 2019-2020

·??????About 93,724 teachers recruited clearing the backlog from 2012

·??????About 100,000 health professionals recruited clearing the backlog from 2012

·??????48,000 teacher trainees, 49,000 nurses’ trainees and 3000 Arabic Instructors had their allowances restored.

·??????1D 1F created over 130,000 direct jobs.

·??????NABCO recruited about 100,000 graduates.

·??????Forestry Commission had 83,000 on afforestation

·??????Ashanti Gold revival brought back over 4000 jobs

·??????Buffer Stock Company licensed 1,300 buying companies and 580 suppliers to supply foodstuffs to schools.

·??????School feeding secretariat added about 5,857 caterers over the last 4years.

·??????Pupils benefiting from school feeding increased by 1.78 million over 4years.

·??????Government spent about ￠15 million monthly for the 1year Covid-19 relief for lifeline consumers.?

·??????Under Livelihood Empowerment Against Poverty (LEAP), from its inception in 2008 to 2016, had 151,596 people benefiting. Under Akufo-Addo alone, about 192,427 people have been added to reduce poverty among the people.

·??????The government commissioned 307 ambulances for One-Constituency-One-Ambulance and over 1000 personnel were employed to managed them.

The list is inexhaustible and does not include those recruited into the security services, Youth Employment Agency (YEA), Planting for Food and Jobs and Rearing for Food and Jobs, the main Civil and Public Services as well as the Agric Extension officers and many more.?

The absence of these interventions meant that families and friends who are mostly the working group would have taken up the bills for all that. However, government has taken up all that and indirectly relieved workers of burden on their salaries.

Government continues to do more to relieve the burden on Ghanaians. For instance, in July this year, 2021, Government granted financial clearance to 3 ministries and their agencies for the recruitment of 11,840 personnel. More financial clearance for many more ministries and agencies are also pending to be granted. ?

What Are the Policy Implications?

If the workers do not defer their demands and persist with their threats, then government could be forced into doing retrenchment in the Civil and Public Services as well as halt further recruitments into them. In addition, less monies will be available to government to provide social services like the Free SHS, LEAP, School Feeding, run the fleet of ambulances and the National Insurance Scheme among others. Economic recovery could be a herculean task and with the current debt to GDP ratio of about 76.7%, we could be heading back to the Bretton Woods institutions for a bail out. ?

Concluding Remarks

In crises time, the state requires sacrifices from its citizens. However, successive governments have tried relentlessly in convincing Ghanaians to sacrifice during crises times. This attitude is what has hindered the Ghanaian economy from growing consistently and has been involved in cyclical reversibility in its growth path and has mostly ended up with the Bretton Woods institutions with their suffocating conditionalities. How can we be complaining of rising public debt, yet we demand more from government?

The unfortunate observation is that those who were home for several years without employment or worked for several years and got paid for only 3months but are now comfortably employed and receiving regular salary are also shouting from their corridors that “Y?n Pini!” (We won’t agree)! Munpini S?n? (You won’t agree in which sense?).

Fellow Ghanaians, I have laid the issues down for God and Country. The choice is for Ghanaians to make.

Assallamu Allaikum!?

Habibu Adam

Senior Economist

Office of Senior Presidential Advisor

?