A Former Minister of State at the Ministry of Finance and Economic Planning, Dr. Anthony Akoto Osei has suggested to the John Mahama-led government to embark on a massive job cuts in the public sector to save the Ghanaian economy from grinding to a halt.
He urged the government to take a cue from players in the mining sector who had laid off over 3,000 workers as result of the plunge in the world market price of gold.
Dr. Akoto Osei, who shared the podium with the Minister of Finance, Seth Terkper and a former Deputy Minister of Finance and currently the Chief Executive Officer of the National Petroleum Authority (NPA), Moses Asaga, at the Graphic-Fidelity Economic dialogue on the state of the Ghanaian economy held in Accra yesterday, stated “the government must be bold to reduce the number of public sector employees to save the economy from collapse.
According to him, reducing the public sector workers was the only way the government could reduce the current huge wage bill.
The government currently spends over 73 percent of tax revenue on 650,000 workers in the public sector, due to the implementation of the Single Spine Salary Structure (SSSS).
Dr. Akoto Osei, like many economists, blamed the country’s huge budget deficit on the ballooning public sector wage bill and expensive election campaign conducted by the government in the 2012 polls.
The SSSS which took effect in 2010, armed at motivating public service workers to improve upon service delivery and productivity, has turned out to be an albatross on the neck of the government.
Dr. Akoto Osei, who is also the Member of Parliament (MP) for Old Tafo in the Ashanti Region, could not fathom why the government was not laying workers on the SSSS.
In his own words: “Most important thing is…some negotiations for retrenchment must begin now. I know government is in discussions with labour. That wage bill cannot be sustained; almost 9 billion just for wages. It cannot be sustained.
“If I were the President, I’ll signal that every ministry must show me 20% of retrenchment in 2015 and 2016,” Dr. Akoto Osei.
“Everybody knows that our current wage bills are not sustainable. Mr. Minister, I think that we should defer full implementation of the single spine salary policy now. The other components that have not started must be deferred or negotiated. Two and three category of allowances, cannot be sustained in the next two or three terms.
“There arrears on the wage bill, even with the first part of implementation; the minister must sit with labour and tell them he cannot pay it all. We are looking for GH2billion in savings in that area,” he insisted.
Dr. Akoto Osei noted that payment of pensions, gratuities and social security are in arrears and must be negotiated since the budget cannot contain them this year.
However, the Minister of Finance, Seth Terkper was quick to say that the government is not inclined to some of the suggestions made by Dr. Akoto Osei, concerning the reduction of wage bill.
Mr. Terkper noted that there was the possibility for voluntary deployment of public sector workers who are nearing retirement amongst other measures.
He, however, agreed that the need for a review of the SSSS could not be over-emphasized.
According to him, the government was looking at budgetary constraints as against public sector wage bill, productivity and other gratuities and considering steps to address the situation.
The Finance Minister and Mr. Moses Asaga told the well-attended forum that the short term prospects of the Ghanaian economy was brighter than before.
They based their argument on the 7.4% growth of the flamboyant profits being made by banks operating in the country.
But renowned economist, Kwame Pianim, who chaired the forum and Mr. Hackman Owusu Agyemang, a former minister of Foreign Affairs, disagreed with the assertion that because the banks are making profits the economy was doing well.
As you can see many small and medium enterprises (SMEs) are dying because of the current economic challenges. So, it is wrong to say that all is well with the economy, Mr. Owusu stated.
Another former Deputy Minister of Finance in the erstwhile Kufuor regime, Prof. Gyan Baffour, noted that “the foundation and fundamentals of the economy is weak. We export cocoa, gold and everything raw. We can’t develop if the country continues exporting everything raw. For Ghana to grow, we must look at addressing these foundation and fundamental challenges,” he stated.