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Business News of Tuesday, 18 November 2014


Wage bill, constraint to national development

The Chairman of the National Development Planning Commission (NDPC), Dr Kwesi Botchwey, has said the wage bill is becoming a major source of fiscal instability and a constraint to the effective implementation of the national development agenda.

Specifically, he stated that the wage bill was squeezing out critical investments in roads, health, education, water and sanitation and was manifesting itself in large budget deficits.

“It is therefore crucial to address the current concerns of the wage bill misalignment on a permanent basis, and ensure that it is maintained at a more sustainable level and does not become a major source of instability in the macro-economy,” he said.

Dr Botchwey made the statement in an address read on his behalf at the 2014 annual general meeting of the Institute of Human Resource Management Practitioners (IHRMP) in Accra yesterday.The meeting, held on the theme: “Matching productivity against rising cost of remuneration”, attracted human resource practitioners from across the country to take stock of the association’s success and shortcomings and plan for the future.

Dr Botchwey said the wage bill, which stood at 35.1 per cent of tax revenue in 1998, increased to about 58 per cent in 2013.

“Indeed, since the implementation of the single spine pay policy (SSPP) in 2010, the wage bill, as a percentage of tax revenue, has increased from 50.6 per cent in 2010 to 58 per cent in 2013”.

He indicated the need, therefore, for the current wage administration process to be reformed and suggested that the foremost thing to do, would be to clean up the wage bill by weeding out malfeasance in wage administration.

Dr Botchwey recalled that the finance minister told Parliament in 2011 while presenting the 2012 budget to the house that over 29,000 employees on the government payroll could not be accounted for after a biometric registration process of all pensioners and public sector employees in at least five regions.

“However, as you remove 100 ghost names about 1000 more re-enter. This, therefore, presents a significant challenge for us to overcome and we need to devise an efficient means to ensure that the wage bill is clean of all malfeasance,” he stressed.

“This will also bring closure and clarity to the debate about what the true wage bill of the country is,” Dr Botchwey added.

The NDPC chairman pointed out that it was equally important for attention to be paid to the issue of productivity in the effort to reform the wage policy.

He said countries with strong labour productivity tended to benefit from high rates of growth and strong export demand.

He, therefore, suggested that competency-based human resource management institutions be supported to nurture a workforce with the right attitude, skills and knowledge.

The President of the IHRMP, Mr John Wilson, said the association had an objective to introduce programmes as part of its effort to enhance the training and development of members.