Business News Tue, 2 Aug 2016

Payroll cleaning saves GH¢21 million in 2 years

The Finance Minister, Mr Seth Terkper, says efforts to clean the payroll of 'ghost names' are yielding the desired results, with some GH¢21 million already saved from the exercise between June 2014 and May, this year.

The amount represented the salaries of some 12,800 'ghost names' that were detected and deleted from the public sector payroll within the two-year period, the minister told Parliament on July 25, when he presented the Supplementary Budget.

The Graphic business checks, however, indicate that the figure is a far-cry from the over GH¢600 million expected to be saved in a single budget year when the project started somewhere in 2010.

But Mr Terkper explained that the detection was made possible by the successful deployment of the Electronic Salary Payment Voucher (ESPV) across the 10 regions of the country.

Unlike the defunct manual salary voucher, the ESPV requires that every employee of the state is electronically verified, with his or her fingerprints taken and stored against the person's biodata and place of work.


This completely eliminates paper work and the tendency where the names of deceased, non-existent or transferred staff were left undeleted or intentionally inserted in the payroll.

Following its success, Mr Terkper said the ESPV system had now become the main validation system through which salaries of public servants were approved and processed before payment.

Implications on fiscal indices

Until their detection and subsequent removal from the list of public sector employees, the 12,800 names, which only existed in paper but could not be traced in persons, were siphoning the GH¢21 million in salaries.

Their combined salary represented about 0.08 per cent of total tax revenue, which closed 2015 at GH¢24.14 billion.


Thus, the successes of the payroll cleansing exercise are of paramount importance to the government and the nation at large, given the millions of cedis that will be saved.

The savings are expected to help drive down the wage bill, whose strong growth in recent years had combined with other factors to undermine the performance of key economic indices.

With the implementation of the single spine salary structure (SSSS) now completed and the ESPV making in roots, the Finance Minister said the pressure that the wage bill posed to the economy would now be reduced.

"It (SSSS) constituted one major source of budget overruns and imbalance. We are gradually bringing the wage bill ratios to manageable proportions," he said.

In 2013, the wage bill was 57.6 per cent of tax revenue but dropped to 43.7 per cent in 2015 following impressive reductions recorded in the quantum.


As a ratio of total output, which is measured by gross domestic product (GDP), the wage bill dropped from 8.8 per cent of GDP in 2013 to 7.5 per cent in 2015.

It is now projected to end this fiscal year at 40.2 per cent of tax revenue and seven per cent of GDP.

Unauthorised employees

Still on payroll cleaning, Mr Terkper said a clean-up exercise undertaken by the Controller and Accountant General’s Department (CAGD) led to the removal of some 6,500 “unauthorised employees” from the payroll.

The exercise involved updating the social security fund and bank account numbers of employees on the payroll database, the minister said.

To help ensure that the state get value for money from its employees, he said the CAGD an operational manual and implementation plan had been developed to facilitate the introduction of staff payroll verification with identity cards.

“CAGD is coordinating the pilot for this plan and full implementation is scheduled for the fourth quarter of the 2016 fiscal year. The ID cards will be used to validate employee’s existence periodically and will constitute another useful step in eliminating ghost workers,” he said.

Source: Graphic.com.gh