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Business News of Wednesday, 5 August 2020

Source: Business 24

Coronavirus: Over 770,000 workers see wages slashed - GSS survey

More than 770,000 workers have had their salaries reduced by their employers since the COVID-19 pandemic started in March, a survey conducted by the Ghana Statistical Service has revealed.

The Ghana Statistical Service in its maiden “Covid-19 Business Tracker Survey Report” said the drop in wages was carried out by more than 46 percent respondents made up of businesses of all sizes.

According to the survey, nearly 85,000 businesses in Ghana remain shut due to the Coronavirus Pandemic with more than 45,000 workers losing their jobs in the aftermath of the restrictions on movement imposed by the President.

The survey which took place between May and June found out that near half a million businesses reporting a significant drop in their sales during the period with those engaged in the hospitality industry among the worst hit.

There could be good news for businesses in the next three months, the survey said, if the impact of the pandemic subsides – this could translate into sales appreciating by 25 percent and employment by four percent.

However, sales could also drop by 24 percent and employment by 15 percent in the third quarter, in the event that situation deteriorates.

Already, businesses have witnessed declining returns since March 2020 when Ghana partially locked down her major cities to curb the spread of the virus. Sales in March dropped 26 percent year-on-year.

The contraction continued in April during the lockdown, declining further by 10 percentage points to close the month’s sales at 36 percent lower year-on-year.

Accommodation and food sub-sector recorded the highest drop in sales by 57 percent due to safety concerns and movement restrictions, followed by trade 35 percent. Other services recorded the least dip of 5 percent.

“The uncertainty over when the pandemic will end, coupled with the disruptions to supply chain and temporary closure of some business will definitely translate into declining sales. And we need to manage our expectations because it will take time for sales to return to pre-covid levels,” a Research Fellow at the Institute for Statistical Social and Economic Research, Dr. Andrew Agyei-Holmes told Business24 in Accra.

Amidst the devastation caused by the pandemic, more than 130,000 businesses had difficulty accessing credit to sustain their operations, as uncertainty made banks skeptical to advance loans. This compelled more than 115,000 businesses to either permanently or temporarily close down.

The government subsequently rolled out the GH¢1 billion Coronavirus Alleviation Programme Business Support Scheme (CapBus), the GH¢2 billion guarantee fund for industries, among others to help sustain the private sector and revive the economy.

“The recovery process would be severely disrupted if we experience a surge in the cases and the impact will be disastrous. There should be more emphasis on sensitization and enforcement of the safety protocols to prevent a second wave, and not just rolling out support schemes. We first have to be healthy to run businesses and the economy,” Dr Agyei-Holmes said.

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