Business News of 2014-04-21

Comment: Reducing public sector wage bill

On Tuesday, April 1, the Finance Minister, in his presentation on Expenditure Rationalisation to parliament, outlined measures to reduce the public sector wage bill. Among them are reducing the incidence of ghost workers, net freeze on employment in some sectors of the public service and most debatable moratorium on public sector wages, all aimed at ensuring fiscal discipline.

Moratorium on public sector wages

This obviously means putting a hold on wages and salary increases. The question arising is: How does this measure fit into the policy of the regular adjustment of petroleum and utility prices being pursued by the government with its attendant skyrocketing prices of goods and services, which, in effect, erodes the purchasing power of the ordinary workers?

Public sector workers can be segregated into four groups, namely Article 71 office holders, high income earners, middle income earners and low income groups.

The government has on several occasions made it clear that about 70 per cent of the total income generated goes into salary and wages. We need to know which category takes what percentage of the 70 per cent. If anything at all, the percentage of workers who take most of the 70 per cent of revenues as their salaries possibly deserve the moratorium!

Moreover, we need to know which allowances relate to each category. Aren’t these astronomical salaries earned by some public officials alarming? Are they not widening the gap between the higher and lower income earners?

Let me illustrate with last year’s 10 per cent increase in salaries. The labourer on the basic salary of GH¢400 rose to GH¢440, whereas the manager on the basic salary of GH¢4,000 also rose to GH¢4400, the difference is almost the same as the salary of the labourer. Is this fair? Are both not struggling with the current competitive market force? I do not know economics, but I know how hard I struggle to pay school fees and utility bills, and also how hard I struggle to get one or two meals a day.

I need to commend the government for embarking on the periodic biometric registration of workers to weed out or minimise to the barest minimum ghost names on payrolls. In so doing, let us not overlook the following measures.

Decentralisation of payroll in education sector

We are all aware that in the public sector, education service holds the greatest workforce that draws salaries from the Accountant General’s Department. Some teachers and other auxiliary staff I always interact with complain that salary discrepancies take a long period to be rectified and, therefore, the need for the decentralisation of the payroll administration to the regions and districts is very crucial and long overdue. Such a framework of payroll management would enhance payroll auditing to reduce fraudulent practices and the incidents of ghost names from government payroll.

Must we continue paying sitting allowances?

I do not think so. I will therefore urge government to embark on a forensic auditing to find out what goes into the payment of sitting allowances in the public sector, and no doubt one would be shocked. Does it make sense to pay sitting allowance to the manager who is employed and receives his or her salary at the end of each month, and sits during working hours to take decision affecting the job for which he is employed? Will it not be economically prudent to channel these payments into the social needs of our farmers and fisherfolk, who, notwithstanding snakes and scorpion bites, severe sunshine and heavy rains, are able to feed the nation? How much does the cocoa farmer receive as bonus in a year?

Per diem allowances

Regulatory measures must be put in place to plug the loopholes and prevent those whose intentions are mainly to rape the national coffers. The number of times officials travel and the allowances they are paid should be regulated in such a way as to make it unattractive to those who use dubious means to cheat the system.

Government directives

Recent directives by government to the electricity company to install prepaid meters in the ministerial residences for ministers to pay their own utility bills is a good step and must be strictly enforced.


My advice is to urge government not to pursue the path of freezing salaries and wage increases to avert imminent spontaneous strike actions. This is because the government itself admits the current economic hardships.

To my dear public sector workers, increase in remunerations must equally be commensurate with higher productivity, because whatever we do now, whether good or bad, is stored for our children and the generation yet unborn.

By: Osei Kennedy

The writer is with the Kwame Nkrumah University of Science and Technology (KNUST).

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