TUC commends 2020 budget; urges gov’t to consolidate economic gains

TUC commends 2020 budget; urges gov’t to consolidate economic gains
Source: Ghana | Myjoyonline.com
Date: 19-11-2019 Time: 11:11:53:am

The Ghana Trades Union Congress (TUC) has commended the government for the economic gains it has made in the last three years.

“The steady GDP growth, falling trend in inflation, reduction in the budget deficit, the healthy level of international reserves, strong external balances, a relatively stable Ghana Cedi, etc. These are remarkable achievements, by any standard, especially if we take into account the recent economic history of Ghana. We commend the government for these significant achievements,” TUC said in its detailed comment on the 2020 Budget Statement and Economic Policy.

“In 2020, we expect government to consolidate the gains for growth, jobs and prosperity for all Ghanaians, irrespective of their location and socio-economic status. Every Ghanaian must feel that his or her welfare is government’s first priority,” the TUC said.

Commenting on the controversial termination of PDS agreement, the TUC said the move was well informed.

“This is good for Ghana. We urge government not to rush to give power distribution services to another concessionaire. With the necessary reforms in the company, ECG can manage power distribution efficiently,” the umbrella body for trade unions in the country said.

The TUC also made the following observation: “In our previous submissions to government, we pointed out the harmful effects of the agreement between government and MPS for the construction of the third terminal at the Tema Port. We called on government to implement the inter-ministerial committee’s recommendation to review the MPS deal. It is gratifying to note that MPS has finally agreed to allow Ghana Ports and Harbours Authority (GPHA) to handle 20% of container cargo at the port. This will reduce or even forestall job losses and minimize labour agitation at the port.

“The PDS and MPS agreements are only two of many such harmful agreements that have been signed on behalf of the people of Ghana. At the 12th Kwame Nkrumah Memorial Lectures in September 2018, Professor Akilagpa Sawyerr, a former Vice Chancellor of the University of Ghana and a former member of Council of State, pointed out a number of technical deficiencies in public agreements and emphasized the need to strengthen Ghana’s negotiating competencies and processes. Professor Sawyerr recommended the re-establishment of Public Agreements Review Committee to complement the oversight efforts of Parliament. He also recommended Open Public Contract approach that allows civil society to scrutinize public agreements. 

“We urge government to take these recommendations seriously. We would like to re-echo Professor Sawyerr’s call for open contracting because it is an effective means by which we can eliminate corruption and venality that have become the main features of our public agreements in recent times. “

Read the full statement below.

TRADES UNION CONGRESS  (GHANA)

COMMENTS ON THE 2020 BUDGET STATEMENT AND ECONOMIC POLICY OF GOVERNMENT OF GHANA

SUBMITTED TO HONOURABLE MINISTER FOR FINANCE

NOVEMBER, 2019

INTRODUCTION

The Honourable Minister for Finance presented the Budget Statement and Economic Policy of the Government of Ghana for the financial year 2020 to Parliament on 13th November 2019. As usual, we followed the presentation with keen interest because of the impact of the Budget on workers and their families. The following are our comments on the 2020 Budget.


MACROECONOMIC MANAGEMENT

First, we note the tremendous gains in macroeconomic management in the last three years. The steady GDP Growth, falling trend in inflation, reduction in the budget deficit, the healthy level of international reserves, strong external balances, a relatively stable Ghana Cedi, etc.

These are remarkable achievements, by any standard, especially if we take into account the recent economic history of Ghana. We commend government for these significant achievements.

The successful reform in the financial sector is particularly commendable. Government’s plan to support five indigenous banks to contribute to financial inclusion is equally commendable.  We urge the Bank of Ghana to introduce and strictly enforce higher ethical standards in the financial sector to enable the sector to perform its role in economic and social development towards the President’s vision of Ghana Beyond Aid.

However, lending rates are too high and perhaps the highest in the sub-region. The high lending rates are an indication that something is fundamentally wrong with our economy and that we are not out of the woods yet. We are happy to note that the President has charged the Bank of Ghana to ensure a significant reduction in lending rates in 2020 as part of the ongoing reforms in the financial sector. We are also very happy with government’s assurance that there will be no vote-winning projects in 2020. We will hold government to this promise.

We foresee further gains in macroeconomic management in 2020. This is very encouraging. However, we need to work hard to address the weak link between macroeconomic stability and living standards of the people of Ghana.  Because of low incomes, limited employment opportunities and financial exclusion (due partly to high lending rates) the macroeconomic gains are not adequately reflecting in the living standards of the majority of Ghanaians. The gap between macroeconomic stability and living standards must be bridged through lower lending rates and employment creation.

We note the improved credit rating by Standard & Poor, Fitch and others. This is a very clear indication of improved macroeconomic management. But government should also be mindful that the people of Ghana are rating its performance silently based on their living conditions. That rating is more important than the credit ratings by international rating agencies.

GOVERNMENT PRIORITIES IN 2020 BUDGET STATEMENT

We have taken note of government’s priorities for 2020 as announced by the Minister for Finance. These include:

•             Domestic Revenue mobilization;

•             Business Regulatory Reforms;

•             Intensify drive for Foreign Direct Investments;

•             Enhanced financial support for local enterprises;

•             Establishment of international financial centre;

•             Digitization;

•             Accelerated infrastructure development; and 

•             Developing national technological capability

We think the priorities are excellent. Government should bring all social partners into the policy space so that, together, we implement these priorities, which have the potential to transform our economy and society significantly.

EMPLOYMENT

Employment remains the greatest challenge facing our country today. Therefore, it deserves more attention because, as we have pointed out time and again, employment creation will not happen automatically. It requires deliberate employment policies to create job opportunities for millions of Ghanaians who are searching for decent employment. We appreciate the effort government has made in the last three years in terms of increased employment in the health and education sectors in particular. But, ultimately, it is the private sector (especially SMEs) which can create jobs on a sustainable basis. Our private sector should be supported to become more productive and competitive internationally. Rice and livestock farmers need special attention because these sectors have serious implication for Ghana’s food security. All administrative bottlenecks must be removed to enable our private sector to thrive.

The efforts towards formalization of the informal economy must be intensified in 2020. We can achieve a lot through digitization, national identification, as well as innovation and reforms at Registrar General’s Department and Ghana Revenue Authority.

In the coming days, the leadership of TUC, Ghana Employers’ Association (GEA) and Association of Ghana Industries (AGI) will meet to discuss the 2020 Budget Statement. Together, we will identify the specific challenges facing the sector and submit our joint recommendations to government before the end of the year.

PUBLIC SECTOR PAY

Public sector pay has been a key source of labour agitation, especially since the introduction of the Single Spine Pay Policy (SSPP) in 2010. The introduction of the market premium generated even more agitation in the sector. It is time to review the SSPP and the market premium as a means of enhancing rewards for those with critical skills that are in short supply in order to keep them in Ghana to enhance public service delivery.

It is against this background that we urge government to review its plans to export the services of our professional nurses to Barbados. Do we really have excess supply of these professionals in Ghana? Why are we exporting their services when many villages in Ghana do not have access to the services of these professional nurses? This is the time we should provide incentives for our health professionals to stay and work in Ghana. We should not encourage them to leave the country.

PENSIONS

From January 2020, pensioners will have to rely on their second- tier schemes for part of their lump sum. Given the short period the second-tier contributions were invested, there may be challenges during the transition. We know that there are many issues with the data that will serve as the basis for payment of the lump-sum benefits for public sector workers. The Minister responsible for pensions, has assured us that work on the data will be completed within this month. We should continue to work together as social partners to prevent any possible unrest.

HOUSING

Housing is another great challenge facing our country. In our previous submission, we proposed an Akuffo-Addo Plan similar to the Marshal Plan to deal with the acute housing shortage. A housing deficit of millions of housing units requires billions of Ghana Cedis to address.

We are proposing a Labour Bank similar to the Japanese Labour Banks to provide loans for housing, cars and other consumer goods for workers in both the private and public sectors. We trust that government will provide the necessary support for this initiative.

We support government’s plan to establish a National Development Bank. This is long overdue. We expect the National Development Bank, when established, to focus on development financing including financing of housing for workers.

TAXES

We note with great satisfaction the support for local textile industry with the extension of tax stamp to curb smuggling and the introduction of zero-rating VAT on sales of locally made textiles. This is a step in the right direction that deserves support from all stakeholders. We also note the upward adjustment of the tax-free threshold for personal incomes to the level of national minimum as well as the reduction of the top marginal rate from 35% to 30% and the removal of the so-called luxury vehicles levy. These measures will enhance disposable income for workers and their families and enhance their living standards.

Tax exemption must be justified on the basis of its direct benefits for the people of Ghana. The current exemption regime does not meet this criterion for tax exemption. Therefore, we are very happy to note that, finally, the Tax Exemption Bill will be placed before Parliament next year. We urge government to engage social partners on this bill for their inputs before it goes to Parliament.

As we make efforts to eliminate harmful tax exemptions, we must also take measures to curb all irregularities in the tax administration system. Government must also review the existing free trade agreements with the aim of reducing the number of imported products that are being admitted into zero-rate tariff category.

HUMAN CAPITAL DEVELOPMENT

It is gratifying to note that human capital development is one of the key priorities of government. The free SHS is one of the most important social policies that have been implemented in this country since independence. We commend government for this initiative, which has the potential to significantly reduce inequality if it is sustained. According to the Honourable Minister for Finance, 32 new TVET institutions will be established in 2020. These efforts must be sustained until TVET education becomes the preferred choice for Junior High School (JHS) and Senior High School (SHS) students who want to continue their education.

As part of government’s human capital/skill development effort we suggest that adequate provision should be made in the 2020 Budget for training and retraining of public sector professionals and workers. This will be a very productive investment because it will improve labour productivity and public service delivery.

One of the local experts in human capital development, Professor Bill Buenar Puplampu, the Vice Chancellor of Central University, has proposed a four-tier framework for Human Capital Development. Tier 1 has to do with policy direction, which clearly specifies human capital requirements including competences, skill set, knowledge and the mindset over a certain period. Tier 2 refers to the process (i.e., education, study and apprenticeship. Tier 3 refers to the development of “actual competencies that are deployed with increasing iterations of synergy” – entrepreneurial acumen, analytical capacity, and respect for rules and procedures. Tier 4 is about our socio-economic goals we set for ourselves as a country including GDP growth, sustainable national debt levels, transformation of natural resources, and ultimately improvement in human development, as measured by the UNDP Human Development Index (HDI).

In a recent National Development Forum, Professor Puplampu proposed a National Committee of Experts to support national efforts toward human capital development using the Human Capital Development framework summarized above. We urge the National Development Planning Commission (NDPC) to take this proposal seriously.

SOCIAL PARTNERSHIP, SOCIAL DIALOGUE, AND PEACE AT THE LABOUR FRONT

In April, 2019, government signed MOU with its Social Partners (i.e., Organised Labour, represented by the Trades Union Congress and Employers, represented by the Ghana Employers’ Association). In May 2019 the President inaugurated the Social Partnership Council. The Social Partnership Council provides an excellent platform for building trust among the partners to work together towards the economic and social development of our country.

We need to deepen social partnership and work together to ensure that social dialogue becomes the norm.

The relative peace we have witnessed at the labour front in the past three years is partly due to the social partnership and social dialogue government is seriously promoting. The sustained engagement with workers and their leaders by the Ministry of Employment and Labour Relations has contributed enormously towards peace at the labour front. We need to deepen such consultations to sustain industrial peace and harmony in 2020 and beyond. We can achieve this if government provides the necessary resources in the Budget for the Ministry of Employment and Labour Relations and its agencies including Labour Department, National Labour Commission, Fair Wages and Salaries Commission, and Factories Inspections Department.

TERMINATION OF PDS AGREEMENT

Once again, we commend government for the termination of the agreement with PDS. This is good for Ghana. We urge government not to rush to give power distribution services to another concessionaire. With the necessary reforms in the company, ECG can manage power distribution efficiently.

In our previous submissions to government, we pointed out the harmful effects of the agreement between government and MPS for the construction of the third terminal at the Tema Port. We called on government to implement the inter-ministerial committee’s recommendation to review the MPS deal. It is gratifying to note that MPS has finally agreed to allow Ghana Ports and Harbours Authority (GPHA) to handle 20% of container cargo at the port. This will reduce or even forestall job losses and minimize labour agitation at the port.

The PDS and MPS agreements are only two of many such harmful agreements that have been signed on behalf of the people of Ghana. At the 12th Kwame Nkrumah Memorial Lectures in September 2018, Professor Akilagpa Sawyerr, a former Vice Chancellor of the University of Ghana and a former member of Council of State, pointed out a number of technical deficiencies in public agreements and emphasized the need to strengthen Ghana’s negotiating competencies and processes. Professor Sawyerr recommended the re-establishment of Public Agreements Review Committee to complement the oversight efforts of Parliament. He also recommended Open Public Contract approach that allows civil society to scrutinize public agreements. 

We urge government to take these recommendations seriously. We would like to re-echo Professor Sawyerr’s call for open contracting because it is an effective means by which we can eliminate corruption and venality that have become the main features of our public agreements in recent times.

2020 CENSUS

The Ghana Statistical Service (GSS) will conduct another census in 2020. Data gathered from the previous censuses, especially the one conducted in 2010, have provided a very solid basis for social and economic policy. We are appealing to government to make adequate provision for the census in the 2020 Budget so that GSS will not have to rely on donors for such an important national exercise.

NABCO can introduce another module to mobilize young university graduates to support the census in terms of field work and data processing. This can reduce the cost of the census and at the same time serve as a good avenue for job creation for young universities graduates.

CONCLUSION

Ghana has made very significant progress in the last three years. But we are not out of the woods yet. In 2020, we expect government to consolidate the gains for growth, jobs and prosperity for all Ghanaians, irrespective of their location and socio-economic status. Every Ghanaian must feel that his or her welfare is government’s first priority.