The Government of Ghana has revealed that the recent upward adjustment in the base pay for public sector workers will result in an increase in the projected amount of Compensation of Employees by GH¢1,177 million at the end of the year. This represents a rise in this key component of the government’s expenditure by 3.88 percent.

“Upward adjustment in Compensation of Employees by GH¢1,177 million from the original projection of GH¢30,314 million (7.0% of GDP) to GH¢31,491 million (7.2% of GDP), reflecting the increase in the public sector base pay by 4.0 percent”.
Finance Minister, Ken Ofori-Atta

This notwithstanding, Finance Minister, Ken Ofori-Atta, indicated that the increment in the base pay for civil servants will not have any impact on Total Expenditure for 2021, as it is projected to remain unchanged from the original budget projection of GH¢113,750 million (25.9% of GDP), as announced in the main Budget presented in March this year.

Negotiation of compensation of employees

It can be recalled that the Government, Employers and Organized Labor concluded negotiations on the National Daily Minimum Wage (NDMW) and public sector Base Pay for two consecutive years, 2021 and 2022 in early July this year.

According to the Minister, the various labour unions in the public sector were all represented at the negotiations of the NDMW by the Tripartite Committee and Base Pay by the Public Service Joint Standing Negotiating Committee (PSJSNC). At the end of negotiations, both parties agreed to an increase of 6 percent and 8 percent in the NDMW and 4 percent and 7 percent in the Base Pay for 2021 and 2022, respectively.

However, shortly after the announcement of the pay rise, members of the various labour unions expressed their dissatisfaction of the outcome, describing the negotiation skills of Organized Labour as “weak”. Some experts also warned that the 4% rise in the base pay is low as it will affect consumption patterns of the workers, stifling the momentum of the country’s recovery process.

Justification for the marginal increment

In response, Mr. Ofori-Atta stated that given the current economic difficulties facing the country as a result of COVID-19, “hard compromises had to be made by both parties”. Giving further details on the outcome of the negotiations, Mr. Ofori-Atta highlighted other obligations that the government is expected to honor under the negotiation.

“The agreement was hinged on a pledge by Government within the agreement period, not to declare redundancy of any public sector worker, to continue to employ into the public service, to vaccinate all workers against COVID-19, and pay social security contributions (with special reference to the second-tier contributions) regularly”.
Ken Ofori-Atta

Furthermore, the Minister assured that Government continues to negotiate with unions on other aspects of conditions of service, other than salaries, that will be to the benefit of workers across the public sector. Government also pledges to work with labour to ensure fairness in remuneration of all categories of public sector workers. Consequently, Mr. Ofori-Atta urges Organized Labour to contribute its quota to revive the economy.

“It is worth noting that, even at the peak of the current pandemic and the resultant dip in revenues, Government never defaulted in payment of salaries or laid off workers in the public service as was the case in the private sector. In as much as Government identifies with the current difficulties being faced by workers, it must also be recognized that the current pandemic has derailed key successes chalked towards economic stability in the country. Thus, we urge labour to continue to partner with Government to rebuild our economy”.
Ken Ofori-Atta