The government and its social partners will roll out the right mix of policies to help protect jobs and incomes.

Delivering the keynote address at the May Day Parade last Sunday, President Nana Addo Dankwa Akufo-Addo said the “government, with the agreement of the Social Partners, will, shortly, engage Organised Labour, employers and key stakeholders to fashion the right mix of policies to help protect jobs and incomes.”

The policies would include rollout of unemployment benefits/ insurance; training and re-training of workers; extension of moratorium in payment of income and corporate taxes, and pragmatism in labour administration and enforcement.

He was speaking on the theme; ‘Protecting Jobs and Incomes in the Era of COVID-19 and Beyond.”

President Akufo-Addo explained that the measures were among “the right mix of policies to help protect jobs and incomes.”

Shared responsibility

President Akufo-Addo said ‘Protecting Jobs and Incomes in the Era of COVID-19 and Beyond’ was undeniably the collective responsibility and duty of all social partners.

He explained that incomes earned by workers were a function of the jobs created by employers and the creation of an enabling environment by the government to help sustain enterprise growth.

Protecting jobs and incomes, he said, also required the government to provide adequate support to enable the private sector to retain its labour, saying that “private-sector-led economic growth is the most conducive way of sustaining inclusive recovery from the COVID-19 pandemic.”

Single Spine

President Akufo-Addo announced that following the National Labour Conference in Kwahu-Nkwatia, the Ministry of Employment and Labour Relations and its tripartite partners had, on April 26, this year, set up a technical committee to review the Single Spine Pay Policy (SSPP) and advise the government accordingly.

He explained that the goal was to find out whether the SSPP was living up to expectation, and, if not, find the way forward.

He expressed the hope that the outcome, which was expected in July, would help put an end to most of the unrest on the labour front involving public sector workers.

With respect to emoluments for Article 71 office holders, he said official data put the figure at less than one per cent of tax revenue.

However, he said, issues of equity within the constitutional framework needed to be dealt with and called for the collaboration of the Executive and the Legislature to address them.

The President noted that the government had worked with the tripartite social partners in the past to deal with such issues and urged all to work hard to increase productivity, so we could increase salary levels and provide the basis for paying a ‘living wage’.

Conditions of service

The colourful parade to mark workers’ day at the Black Star Square was the first in three years since COVID-19 restrictions forced the May Day parade to be held virtually from the Ghana Broadcasting Corporation (GBC).

Organised labour used the occasion to throw light on a litany of challenges and demanded solutions, including the removal of salary inequalities and a 20 per cent cost of living allowance (COLA).

President Akufo-Addo, however, stated that although conditions of service in the public service needed improvement, it should be done within budgetary constraints in order not to put excessive pressure on public finances.

He explained that the payment of compensation alone to the 700,000 public sector workers absorbed 56 per cent of tax revenues last year.

He said the government spent GH¢31.7 billion on compensation to employees, made up of wages and salaries, pensions, gratuities and social security.

“This was paid out of tax revenue of GH¢56.5 billion,” he added.

He explained that the tax revenue to compensation ratio was well above the ECOWAS threshold of 35 per cent and above the sub-Saharan Africa average of 43 per cent.

President Akufo-Addo indicated that the fiscal impact became even more stark when the three largest expenditure items — compensation for employees, interest payments and remittances to statutory funds — were put together.

That amounted to GH¢81.3 billion, representing 144 per cent of tax revenue as of last year, he said.

“This means that the total tax revenue is not enough to meet our commitments on compensation, interest payments and statutory funds, as we have to resort to non-tax revenue and borrowing to be able to meet these obligations,” he said.

“This shows how rigid the budget is and how fiscal space is non-existent or limited,” he explained.

Petroleum price

Touching on petroleum price increases, he indicated that the suggestion of removing taxes on petroleum products would reduce government revenue by about GH¢4 billion, which was not sustainable.

“At this time, when we are determined to expand government revenue in order to increase our capacity to finance our own development, can we afford to reduce tax revenue by GH¢4 billion?” he quizzed.

“The government is currently confronted by very tight financing conditions, in the wake of inadequate domestic revenue mobilisation,” he indicated.

The President said part of the revenue from the taxes on petroleum products was used to pay the salaries of public sector workers on government payroll.

Permanent solutions

He gave an assurance that the government was addressing the issue of fuel price increases by implementing measures, some of which had succeeded in stabilising the exchange rate, a key determinant of fuel prices.

“The government is also working hard to ensure reliable supply and availability of petroleum products, thereby preventing shortages, a phenomenon which was being experienced in some neighbouring countries. By the same token, we are keeping the lights on in Ghana,” he added.

The President reminded Ghanaians that even though the country was a producer of crude oil, with a current output of 148,000 barrels per day, it was still a net importer of petroleum products and, therefore, continued to be vulnerable to the price volatilities of petroleum products on the world market.

He said the government was making intense efforts to rehabilitate the Tema Oil Refinery (TOR) to enable it to contribute to stabilising petroleum prices.

He said the government was also encouraging private companies to establish refineries in the country, one of which was 80 per cent complete and was expected to be inaugurated before the end of this year.

He said the government could not take ad hoc measures that would give only temporary reprieve and aggravate the situation in the medium to long term.

“As much as possible, let us use existing institutions and sustainable measures to address these concerns,” President Akufo-Addo said.

Impact

He noted that just as the social partners had worked together to reduce the impact of COVID-19 on lives and livelihoods and grown the economy from 3.4 per cent in 2016 to an average annual growth rate of seven in 2017 before the pandemic struck, he remained confident that they could, in the same spirit, work to sustain the rebound of the economy and thereby help improve the living standards of the citizenry.