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Business News of Wednesday, 12 March 2014


Freeze 'unsustainable' Single Spine Pay Policy - Akoto Osei

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A former Minister of State at the Ministry of Finance, Dr Anthony Akoto Osei, has advocated the curtailment of further payment of salaries using the Single Spine Pay Policy (SSPP), saying that is the surest way of reversing Ghana’s economic woes.

He also urged the government to commence negotiations for retrenchment in the public sector to cut down the country’s current huge wage bill of about GH¢9 billion.

“The current wage bill is unsustainable. We should defer further payment of the single spine salary and negotiations for retrenchment must begin now,” he stated.

However, the Minister of Finance, Mr Seth Terkper, disagreed and stated that the single spine migration was substantially completed and there was nothing to suspend.

“What we are looking at now are the implications of the single spine. The second point is that if you suspend the single spine, you will be going back to two past experiences when we attempted wage rationalisation from the public sector,” he added.

He pointed out that the prudent thing to do in the present circumstance was to look at the experiences from the implementation of the single spine and address the challenges and not make the mistake that simply stopping the policy would rationalise public sector pay.

Both were speaking at the first ever Daily Graphic/Fidelity Bank Breakfast Meeting on the state of Ghana’s economy in Accra on Tuesday.

The about three-hour deliberation on the country’s economic challenges was undertaken by three gentlemen who have had the opportunity to handle Ghana’s purse at one time or another and it attracted over 236 participants made up of representatives of government agencies, the financial sector, different sides of the political divide, governance experts and economists.

The discussant was Mr Moses Asaga, a former deputy minister of Finance, while the Chairman for the forum was Mr Kwame Pianim, an economist.

Ghana’s credibility

Advancing his argument, Dr Akoto Osei said the government could not continue to pay all it was paying now as salaries because the money did not exist in the first place, while the country’s inflation continued to rise.

“The deficit issue cannot come down if the minister does not do it,” he stressed, urging that cuts should be done in the medium term in the next two to three months, “so Ghana can regain its credibility”.

In response, Mr Terkper said while he admitted that the incidence of deficit was an issue, the overrun in expenditure was incensed by volatility in world commodity prices such as cocoa, gold and petroleum products.

He further stated that a committee had been set up by the President, after the forum on the Single Spine Salary Structure (SSSS) in Ho last year, headed by the Minister of Employment and Labour Relations, which was expected to submit a report soon on many of the issues raised.

Ho forum

A two-day national forum on the SSSS on the theme, “Building national consensus for sustainability of the Single Spine Pay Policy (SSPP)”, was held in Ho from August 6 to 7, 2013.

At the Ho forum, Mr Terkper said “Current trends in the compensation bill resulting from the implementation of the SSPP, however, suggest that the pay policy is not sustainable on the trajectory we are currently observing.”

He added that the mounting wage bill resulting mainly from the implementation of the SSSS posed systemic risks to the annual budget and threatened macroeconomic stability, pointing out that “the phenomenon has exerted tremendous pressure on service delivery in the public service, as it tends to crowd out other important expenditure areas”.

Moratorium on wage increase

The Finance Minister, however, said the issue of wages was addressed when the last budget was presented and the government proposed a moratorium on wage increases, stressing that when the committee finished its work, the government would then come out with its position.

“What has come out of this forum is to buttress the importance of Ho, and the President, in his State of the Nation Address, promised that there would be a post-Ho forum after these reports have been submitted,” he added.

He said the government was adopting an approach which addressed the short-term challenges and also recognised that some of the challenges being experienced now were structural in nature.

“You don’t implement one, finish it and then you go. You do them concurrently,” Mr Terkper said.

For Mr Asaga, however, deficit financing was good if it could be proved that it had been used for development purposes.

“I don’t think deficit financing is out of the way if it can be proved it was used for something important,” he said.

He said although deficit financing might have its negative side, it also had positive sides, and gave examples of many developments in the country that showed that Ghana’s middle-income status was real.

“The future is bright for Ghana, despite the macro deficits that have been distorted lately,” he said.

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