We’ll reduce wage bill to 35% - Mahama

President John Mahama has said his Government is aiming at reducing the wage to tax revenue to about 35 percent to agree with ECOWAS standards.

Speaking at an investment forum in Berlin, Germany where he is on a two-day visit, Mr Mahama said beside tackling some of the “short-term” challenges, “We’ll also continue to work to reduce the level of wages to tax revenue, which has been one of the major reasons for the economic challenges we have faced.”

“As a result of the implementation of a new wage policy, we suffered a wage spiral and wage to tax revenues went almost as high as 70 percent.

“We have consistently continued to bring this down, and as at last year, we had pushed it to about the 50 percent mark. The target is to bring it to 35 percent to tax revenue, which is the ECOWAS standard that is agreed and we are hopeful that in the period of the IMF porgramme by 2017, we should bring wages in sync with tax revenues,” Mr Mahama told investors at the forum Tuesday January 20, 2015.

In October last year, President Mahama said as a result of the migration of workers onto the Single Spine Salary Structure (SSS) and the subsequent clearance of all outstanding issues relating to the implementation, the public sector wage bill reduced from 73% to 57%.

He said, at the time that the progressive reduction of the wage bill could be put down to the payment of all salary arrears that accrued after the migration of various public sectors onto the single spine salary structure (SSSS), as well as the payment of all salary increments that resulted from the implementation of the SSSS.

“There are no arrears outstanding under the single spine and so you can notice that progressively, the wage to tax revenue bill is going down,” he told Ghanaians in London in October last year.