The government continues to demonstrate its commitment to its fiscal consolidation efforts in the medium term. According to the government, it will employ biometric registration mechanism to weed out ghost workers.
This is one of several measures that government has outlined to cut down public expenditure this year and beyond.
“On the expenditure side, wage bill containment measures such as… the use of biometric registration mechanism to weed out ghost workers will be pursued”.
Ken Ofori-Atta – Finance Minister
Compensation of employees’ forms one of the major expenditure components of the government. Aside interest payment, government spends a chunk of its resources on wages and salaries, SSNIT payments and other allowances.
For instance, in 2021, the government projects GHȼ 31.5 billion as its expenditure on employee compensation. This represents 41.8% of the government’s projected revenues, including grants of GHȼ72.48 billion for 2021.
Increase in Employee compensation
Meanwhile, employee compensation is projected to be on the rise in the medium-term as per the new budget preparation guidelines. Government expects this expenditure component to increase from GH¢31.5 billion in 2021 to GH¢34.6 billion in 2022. The amount earmarked for 2022 accounted for 38.8 % of projected revenues, including grants, totalling GH¢89.1 billion.
Government expects this expenditure component to increase further to GH¢38.5 billion, GH¢42.3 billion, and GH¢46.9 million in 2023, 2024, and 2025, respectively.
Other measures to reduce wage bill
As such, the government is exploring possible avenues that will at least seal all leakages on its payroll. The Finance Ministry has outlined several other measures as part of its resolve to reduce the wage bill.
One key wage bill containment measure government is implementing is negotiating wage adjustments within budgetary constraints and payroll audits. The government also noted that it will partner with the private sector to execute growth-oriented projects through PPPs with balanced shared risks and strictly enforce the PFM Act 921,
Also, it pledges the enforcement and implementation of an enhanced commitment control system in addition to enforcing procurement codes to ensure value for money. Another thing government thinks will help reduce expenditure is leveraging the balance sheet of GIIF to embark on accelerated infrastructure development.
Labour demands 25% increase in base pay
The initiative of reducing the wage bill started this year when the government decided to increase the base pay of its employees by 4%. This, however, attracted the fury of Organized Labour as it says this is an attempt by the government to exploit them.
Consequently, aggrieved coalition of public sector workers on Wednesday, August 18, 2021 took to the streets of Accra to protest. According to the group, the percentage increment is unfair to public sector workers, and would not mitigate the current high cost of living in the country. Currently, inflation, which gives a general picture of the cost of living in the country rose to 9.0% in July. This, could be attributed to the newly introduced taxes earlier this year.
As a result, Organized Labour is therefore, expecting nothing short of a 25% increment in wages for its members this year. This puts the government in a tight situation as it could jeopardize government’s commitment to reduce expenditure on employee emoluments.
READ ALSO: Producer Price Inflation inches down to 8.4% in July 2021
