General Secretary of the ICU, Mr Solomon Kotei
The fate of Ghanaian workers hangs in a balance as the harsh economic conditions continue to bite hard, and they are uncertain about the future.
Workers in both formal and informal sectors have told the Business Finder in separate interviews that they are worse off than they were three years ago.
Some contractors who spoke to this paper said they no longer get contracts as they used to three years ago.
“The situation is so dire that we are compelled to rent out our concrete mixers, trucks and other equipment to private and individual persons so we can earn something and make ends meet. As and when we secure projects we are able to engage workers. In the absence of any projects there is no work and so no income,” a contractor described.
Indeed, series of surveys conducted by the Association of Ghana Industries (AGI) in its Business Barometer Index (BBI) in the last three years have identified delayed payment of contractors as one of four topmost challenges of industry.
The situation has incapacitated many a contractor and thrown them out of business since they are compelled to contract bank loans (at high-interest rates) to pre-finance the projects.
Government, the highest spender, in the execution of the national budget, allocates funds through the Ministry of Local government and its sub-agencies (District and Municipal assemblies) for the construction of roads, buildings (schools, hospitals) and the provision of other social services.
The construction industry in Ghana is bedeviled with numerous challenges, including delayed payments for work done on government projects, the lack of capacity of local companies to compete with their foreign counterparts, and inadequate financial capacity.
Personnel of the security forces say they are also suffocating under the harsh economic conditions as their salaries can hardly take them home.
Some serving officers of the Police Service told this paper that their incomes are eroded by the rising prices of things on the market.
When interviewed, teachers in both public and private schools lamented the alarming unbridled increases in the prices of goods and services.
“Things are pretty tough now; my salary has seen no increment in the past three years yet the prices of cement, rice and foodstuffs are rising by the day,” Mr Daniel Amoah, a teacher in a public school said.
General Secretary of the Industrial and Commercial Workers Union (ICU), Mr Solomon Kotei says “the fate of the Ghanaian worker today is uncertain; Ghanaian workers are fed up with the current state of the economy.”
He has warned workers to tighten further their belts since according to him; conditions will not get any better till after two years.
The Union, one of the largest in the country with a membership of about 5,000 cutting across all industries, last week held a demonstration in one of Ghana’s industrial hubs (Tema) on the theme ‘The state of the economy and its effects on Ghanaian workers.’
Mr Kotei disclosed during the protest that the Union was negotiating severance packages for 400 workers, who are due to be laid off in a fortnight by two companies in Tema due to the harsh economic crisis pertaining in the country.
The Ghana Employers' Associations (GEA) in April this year lamented that close to 13,000 workers had lost their jobs in the first quarter of the year, due to the erratic power supply.
The ICU itself has projected the loss of over 3,000 more jobs from the country’s industrial sector by the close of 2015.
Agitations in the labour front worsened in 2013 and 2014 as organised labour held series of demonstrations to protest the worsening economic situation in the country.
Human Resource experts have pointed out that the major effect on workers, concerning their living conditions over the years, has been the erosion of the value of their incomes in real terms.
“This has been due to the currency depreciation over time, as well as rising inflation and other variables,” One expert says.
The imposition of different forms of taxes and levies has worsened the plight of workers.
According to the ICU, the huge threshold of tax paid under the ‘Pay As You Earn’ (PAYE) platform is becoming increasingly unbearable for workers.
Other taxes are the 17.5 per cent Value Added Tax (VAT) on fee-based financial services, as well as VAT recently charged on domestic air fares and almost every product one comes across.
Even overtime allowances, the ICU laments are taxed, up to half the amount of the allowance paid.
“Any commodity you buy we have VAT on it, there is NHIL on it, there is talk tax on communication via the phone so the worker is already overburdened with too much tax,” he lamented.
In spite of the multiplicity of taxes, the National Daily Minimum Wage has seen marginal increases over the past few years.
The wage was increased from GH¢4.48 in 2012 to GH¢5.24 in 2013. The government increased it further to GH¢6.0 in 2014 and then to GH¢7 in 2015, an increment of GH¢1.
It is obvious that the current economic climate is bound to affect salary negotiations in the coming years, more so with respect to the dictates of the ongoing programme with the International Monetary Fund (IMF).
Documents submitted to the Fund by government in support of a request for a bailout, provided among others that workers are only to see a 13 percent wage increase for the three-year period of the IMF programme, while the 10 percent cost of living allowance granted workers in 2014 has been scrapped.
This will undoubtedly make the Ghanaian worker poorer and poorer as the cost of living is bound to get higher than his or her take-home pay.
Organised labour is still in court with government over who should manage workers’ contributions under the second tier pension scheme.
Last year, public sector workers strongly opposed government’s attempt to impose Pension Alliance Trust as a corporate trustee to manage the second tier pension funds.
Workers remain agitated over the fact that they are denied of quality life when they go on pension.
An amendment to the Pensions Act of 2008, (Act 766) in December last year reduced the minimum pension payable to a retiree from 50 to 37.5 percent of the average annual salary of the retiree’s best three years of his working life.
The first batch of contributors under the new scheme are retiring this year, and reports from some contributors say they are being handed less than 10 percent of their expected lump sum pensions.
The cedi has also been a great subject of concern for businesses and individuals alike. The currency, which is now ranked as the worst performing currency on the African continent, has depreciated by more than 80 percent against the US dollar since the beginning of 2013.
This trend has resulted in the frequent increment of the prices of goods and services thereby putting severe pressure on the incomes of average Ghanaians.
In January 2013, the cedi was trading at GH¢1.90 to a US dollar. It, however, ended the year on a bad but not surprising note – trading at GH¢2.35 to a dollar representing a year-on-year depreciation of 23.7 per cent. By December 2014, the local currency had again depreciated by a further 36.2 percent.
Currently, the cedi is on a recovery streak having regained over 30 per cent value out of some 40 percent it lost against the US dollar in the first half of this year. Collectively, the cedi has only depreciated by 7.8 per cent against the US dollar this year.
Ghana's inflation rate has been on an upward trend since the beginning of 2015 as the depreciation of local currency, the cedi, continues to push import prices up
The inflation entered the double-digit zone in 2013 when by end of year in December it was 13.5 per cent. It quickened to 17 percent in December 2014 but dropped slightly to 16.9 percent in May this year.
The rise in inflation has been attributed largely to rising food prices, fuel price hikes and utility tariff adjustments.
Senior Economist with the Institute of Economic Affairs (IEA), Dr J.K. Kwakye points out that since inflation was even much higher in the past, it means that over a longer period of time, the cumulative increase in the cost of living has been much higher than the corresponding increase in wages and salaries.
“The gap between incomes and the cost of living can be best illustrated with the real value or purchasing power of the minimum wage or with the income-poverty rate,” he adds.
The daily minimum wage is currently GH¢7 which works out to GH¢210 for a 30-day month.
For anybody at the bottom of the pay ladder, receiving this monthly income, it is obvious from the prices of goods and services that it is not enough to pay for his or basic needs like food, rent, transportation, utilities, and communications.
Fuel prices have steadily increased from the beginning of 2013 thereby further deepening the woes of the average Ghanaian worker. At January 2013, the price of petrol was GH¢1.71 per litre while diesel and Liquefied Petroleum Gas (LPG), which is now used in most households, were GH¢1.72 and GH¢1.3 (per kg) respectively. Kerosene was GH¢0.91 per litre.
In mid-February, 2013, however, the National Petroleum Authority (NPA) announced a 15 to 20 percent increment in fuel prices. The new prices had petrol going up to GH¢2.05 and diesel GH¢2.07 per litre. LPG increased to GH¢1.95 per litre while kerosene increased to GH¢1.05 per litre.
In June that same year, petrol again went up by 3 per cent to GH¢2.11 while diesel went up by 2 percent to GH¢2.11. LPG was also increased by 3 per cent to GH¢2.00 per kg.
In December, 2013, the price of petrol and diesel was further increased to GH¢2.19 and GH¢2.22 per litre respectively. LPG had the highest price increase of over 11 percent.
In all, fuel prices went up on an average of 23 percent in 2013.
In July 2014, petrol was increased by 23.08 percent to GH¢3.36 a litre , while diesel saw a 22.01 percent to GH¢3.27. LPG was also increased by 15.68 per cent to GH¢3.32 per kg while kerosene saw an increase of 23.75 percent.
Half way into this year, fuel prices have already gone up collectively by about 15 percent. Early this year, fuel prices went up by 4 per cent and at the beginning of this month went up again by 9 per cent.
Economists maintain that Ghana needs to fix its macroeconomic fundamentals, ensure a stable and predictable currency that will improve domestic production to boost exports.
According to them, a stable economic environment will improve business performance and expansion leading to the creation of more jobs to deal with the high unemployment situation.
Government must do well to stay within the current IMF programme objectives and deliverables.
It must stay within its budgeted expenditure year on year and strategise to overcome what will be complex and difficult wage opener negotiations in 2016.
On the labour front, analysts have advised that workers work towards restoration of the eroded value of their wages in real terms through the negotiating table, while avoiding the use of intimidation and unfair labour practices such as strikes and threats of same.
