Public sector productivity and the emerging wage crisis

Media reports last week confirmed that the central government is having a tough time with managing the public sector wage bill to the extent that the government has been borrowing from the money market at high interest rates to pay public sector salaries.

The central government, we have been told, has also resorted to diverting the budgetary allocations of the various ministries, departments and agencies of state, (MDAs) to pay public sector emoluments.

The government has since explained that it did not transfer budgetary allocations of government organizations for the payment of salaries per se, but only utilized monies from unused balances of the agencies as a first option, instead of borrowing on the money market.

Be it as it may, the central issue of concern is that the public wage bill has been a rather ravenous guzzler of national revenues for many years running now, to the extent that more than 70 percent of all national revenue now goes to pay public sector workers .

When in 2013, the government spent a colossal GHc 4.3 billion on public sector wages between January and June of that year alone, some labour market and economy watchers warned that progressive increases in the public sector wage bill would soon make the national wage bill far higher than total annual national revenue.

If that happened, it was pointed out, the government would have to do the unthinkable: Borrow money from the money at exorbitant interests rates to pay public sector salaries.

That regrettably, is precisely what is happening now by the government’s own admission, and to think that the latest wage increment is going to see a 12.5 percent rise in public safety wages in coming months!

There are possible solutions to the public sector wage problem, the most obvious one being the downsizing of the public service, but that could impact negatively on the quality of public services if done across board, as the numbers of nurses, teachers, public sector doctors, engineers etc. would be reduced.

The services of those on the government pay roles who really have very little to do at workplaces could be dispensed with, but that would lead to a significant increase in the level of unemployment if no productive redeployment of the retrenched labour is carefully planned

With the economy facing uphill management challenges and the public sector wage bill continually shooting to the roof, a solution to the emerging public sector wage crisis must be found somehow.

The unanswered question of how national revenues could be raised significantly through increased public sector productivity so that workers could be better paid without too much strain on the annual budget, is a critical one the government and the TUC must agree upon.