Business News of 2014-01-13

TUC wants pay to reflect living costs

A wide gap seems to exist between the wage-rise expectations of public sector workers and the government’s negotiating position, with the Trades Union Congress (TUC) intimating that even an increase that matches the projected inflation rate would not be satisfactory.

The TUC and other labour groups have already rejected government’s proposal to freeze public sector pay in 2014. Secretary-General of the union Kofi Asamoah told the B&FT a wage-freeze “will not be acceptable in any way”, given that workers’ real wages -- defined as the purchasing power of their salaries -- have already fallen because of higher-than-expected inflation last year and continued growth in the cost of living.

“It’s important to say that 2013 was an exceptionally challenging and very difficult year for workers and the whole country, considering the astronomical increases in taxes and tariffs. This definitely led to reduced purchasing power of our workers,” he said, adding: “with all these increases, we don’t really see where this proposal for a freeze is coming from.”

But apart from putting paid to the idea of keeping wages at their 2013 levels, Mr. Asamoah implied that workers will be demanding an increase in excess of 9.5 percent -- which is the projected end-2014 inflation rate.

He stated: “Even if the increase matches the projected inflation, that will simply restore workers’ purchasing power. And we also have to consider that the actual inflation could be higher than the projected -- in which case we wouldn’t be able to come back and ask for a further increase. So the projected inflation is not the only factor as there are other cost-of-living elements.”

Last year, workers’ wages were boosted by 10 percent, with inflation forecast to be 9 percent in December. However, following the removal of energy and petroleum subsidies and the steep fall in the cedi, inflation jumped rapidly and stood at 13.2 percent in November.

Talks over 2014 pay began in the last quarter of 2013 but are yet to be concluded. The National Tripartite Committee, comprising government, the employers’ association and the TUC, will determine a new national minimum wage and a separate minimum salary for the public sector, known as the base pay.

Controlling the growth of wages to lower the share of state revenue used for that item of expenditure is among government’s efforts to cut the deficit and rebalance spending in favour of public investment.

The total size of wages was 53 percent of tax revenue in 2012, and the government’s goal is to trim down the ratio to 35 percent, seen as a more sustainable level that provides space for more taxes to be spent on infrastructure and social services.

The government has also pledged to narrow its budget deficit to 6 percent of GDP by 2016, a target that assumes tight management of wage expenditure with an average increase of 10.4 percent per annum between 2014-16.

Source: B&FT
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