Former Minister for Finance, Seth Terkper, has opined that calls for increased wages by public sector workers is going to further contract the already limited fiscal space available for government to execute planned programmes.
According to Mr Terkper, the budget which is already under pressure due to the fact that mobilized revenues are insufficient to meet government’s expenditure – especially when wages and interests payments alone are more than 100% of mobilized revenue – a further increase in wages of public workers will put more pressure on the budget.
“The current problem government is facing is that apart from the squeeze (adverse impact of Covid-19 on economy) which is making it difficult for wages to be paid, we also have a situation where interest payments alone when added to wages is higher than our total revenue. And we all know that the budget is heavily earmarked with some of the revenues going to GETFund, NHIS etc.”
“So if total revenue is low and wages and interest payments surpass 100 percent of total revenue, then it means you are borrowing to pay wages and interests. And this is even before debt servicing, funds to government agencies, monies to undertake development and so on. And so borrowing to finance all these is putting pressure on the budget,” he stated.
“At the moment, the wages in the 2021 budget itself is non-negotiated wages based on article 19 of the Public Financial Management Act, but of course when the negotiation is done and the wages are increased then we should expect more pressure on the budget that has a deficit of 13 percent and a debt of about 80 percent and a borrowing phenomenon for almost everything that is in the budget,” he added.
Mr Terkper made the above assertions speaking on PM Express and monitored by norvanreports, on how government is expected to manage public sector workers’ compensations amid the pandemic especially given the fact that public workers are calling for increased salaries.
Public sector workers have expressed worry about the delay in the upward review of their salaries amid increased and newly introduced taxes, expressing fears over a possible freeze in increase of salaries by government for the next four years.
But allaying their fears at the 11th Quadrennial Delegates Congress of the Trades Union Congress (TUC) in Kumasi, President Akufo-Addo assured the leadership of the TUC that salary increments for public sector works had not been frozen for the next four years.
“The truth of the matter is that, we are not in normal times, and we are appealing to all Ghanaians including organised labour to assist the government in this endeavour to help rebuild our public finances and economy. But let me reiterate that, the salary increments for public sector workers have not been frozen,” stated the president.
Government, according to the 2021 budget statement, is expected to spend about Ghs 25.7 billion – 5.9 percent of GDP – in wages to public sector workers for this year.
The amount to spent this year is however, 0.6 percent less of GDP (6.5 percent) on what was spent on wages of public workers for last year 2020.
