The Ghana Trades Union Congress (TUC) has pledged its commitment to the 2017 budget statement and economic policy of government, describing it as an “ambitious one that seeks to address the challenges confronting our country”.
In a five-point communiqué on the budget, the umbrella labour union said it supports government’s commitment, for instance, in solving the unemployment problem.
It said policies such as ‘1-district, 1-factory’, ‘1-vilage, 1-dam’, ‘Planting For Food and Jobs’, $1 million for each constituency and small business development are statements of commitment in solving the unemployment crisis.
“The initiative to undertake employment audit of government-funded projects is very much appreciated,” TUC said.
“Successful implementation of these initiatives will go a long way to alleviate the employment challenge which, in our view, is the greatest challenge facing Ghana today.
“In particular, the one- district-one-factory and one-village-one-dam initiative will help create decent jobs in all parts of Ghana.”
COMMENTS ON THE 2017 BUDGET STATEMENT AND ECONOMIC POLICY OF THE GOVERNMENT OF GHANA
The NPP Government presented its first Budget Statement and Economic Policies to Parliament on March 2, 2017. Discussion in the media, since the budget was presented, is an indication that, Ghanaians are watching. Obviously, the expectations are very high, and rightly so.
Before the budget was presented to Parliament, the TUC submitted a 17-page budget proposal for the consideration of government. In that submission, we shared our perspectives on the economy in a number of areas. We also put forward some suggestions for consideration. As usual, our proposals focused on employment and labour-related issues.
In this submission we assess the 2017 budget within the context of our earlier submission and, more importantly, against the background of the high cost of living, joblessness and desperation among the working people of Ghana, in particular, and Ghanaians in general.
In our previous submission, we supported government’s commitment to make job creation the main priority in its economic policy. Specifically, we advised government to ensure that its tax policies, investment policies, procurement policies, and trade policies focus on creating jobs for Ghanaians, especially the youth. We also called for clear employment targets in the budget.
A careful reading of the budget indicates that government recognizes the employment challenge as such and has a clear intention to address it. According to the Finance Minister, the centerpiece of the 2017 budget “…is to create an environment that will stimulate the private sector to create jobs, especially for the youth”. Most of the policy initiatives contained in the budget statement are consistent with the employment policy objectives of government and the main theme of the budget “Sowing the seeds for Growth and Jobs”.
We have taken note of the special programmes such as the one-district-one-factory, one-village-one-dam, small business development, planting for food and jobs, national entrepreneurship and innovation programme, one-million-dollar- one-constituency, among other initiatives aimed at creating jobs for Ghanaians. The initiative to undertake employment audit of government-funded projects is very much appreciated. Successful implementation of these initiatives will go a long way to alleviate the employment challenge which, in our view, is the greatest challenge facing Ghana today. In particular, the one- district-one-factory and one-village-one-dam initiative will help create decent jobs in all parts of Ghana.
We find these job creation initiatives very positive and refreshing. We will support government to ensure successful implementation of these employment creation initiatives.
However, we would like to, once again, draw government’s attention to the need for clear targets for employment creation to serve as a guide for assessing performance, sector by sector, region by region and district by district. Since women and the youth have suffered discrimination in terms of decent jobs, it will be important to assess our performance in terms of the proportion of new jobs that benefit women and young people directly. This may appear burdensome but that is the only way we can ensure that new jobs are equitably distributed across regions, districts and across men and women.
The budget emphasized GROWTH and JOBS as shown in its theme “Sowing the seeds for Growth and Jobs”. Even a casual analysis of the budget reveals that government has set clear targets to measure growth within a year. At the end of the year we can assess whether that growth target has been achieved or not. Regrettably, there is no such target for job creation. Government should be bold enough to set employment targets region by region, and district by district.
We will not accept the usual answer that there is no data on employment. We need statistical evidence for job creation across the ten regions. We expect government to make resources available to the Ghana Statistical Service (GSS) and other agencies to begin collecting data that will allow for an objective assessment of the efforts towards employment creation in each of the ten regions and all districts for men, women and the youth. It will also enable government to review its employment policies regularly or even annually.
The budget makes a bold commitment to private sector development as a means of creating employment. Indeed, in line with the philosophy of the NPP, the private sector has been assigned many responsibilities in this budget at least in respect of job creation. There have been some measures to ease the constraints on the private sector. The tax reliefs are notable examples. The commitment to improving the business environment and reduce transactions cost for the private sector are commendable.
Despite this high degree of commitment to the growth of the private sector, the budget failed to address the fundamental challenges that have hindered the development of the private sector. The high cost of borrowing and the negative effects of the unbridled trade liberalization policy are areas that need urgent attention and very specific policy measures. The Finance Minister mentioned the “high cost of capital” as one of the factors impeding the growth of the private sector. However, there were no specific policy measures to deal with this fundamental problem. Government seems to believe that by reducing its own domestic borrowing, cost of borrowing will come down. But so far, the evidence does not support this belief.
Our trade policy has become a hindrance to the growth of the domestic private sector. The national trade policy offers our foreign competitors much more than our commitments in the World Trade Organization (WTO) require from Ghana. We need to re-calibrate our trade policy to make domestic production profitable.
We agree with the Minister for Finance when he said that “[t]he regional market, thus, remains critical for the transformation of the Ghanaian economy” and that the “success of the ECOWAS Trade Liberalisation scheme will depend on the concerted efforts of the members and adherence to protocols”. The West Africa market is, thus, a very important market for many of the initiatives outlined in both the 2017 budget and the NPP manifesto.
It is against this background that we find Ghana’s approach and commitment to the Economic Partnership Agreement (EPA) problematic. The budget signals Ghana’s preparedness to participate in a West Africa-European Union EPA, an agreement Nigeria (whose economy constitutes 70% of the total output of the ECOWAS region) has decided not to sign along with The Gambia and Mauritania. What does Ghana see about the EPA that Nigeria does not see?
We hold the view that a free trade area with the European Union without the participation of Nigeria will constitute a formidable threat not only to the regional market upon which Ghana intends to build its industrial ambitions. The EPA Fund, which government intends to access, is simply a bait to lure Ghana into a trade agreement which is bad in every conceivable respect for the domestic private sector and for job creation. The TUC does not and will never support this trade policy initiative with the European Union because it will not support our effort towards building a strong domestic private sector for job creation.
Perhaps, one policy initiative that sets this budget apart from all previous budgets has to do with taxation or tax reliefs, to be more precise. Again, consistent with the NPP Manifesto to shift the focus of economic management from taxation to production, the 2017 budget has reduced or eliminated several taxes. Taxes that are abolished include the one percent special import levy, the so-called “kayayei” market tolls, 17.5% VAT/NHIL on financial services, 17.5% VAT/NHIL on selected imported medicines that are not produced locally, 17.5% VAT/NHIL on domestic airline tickets, 5% VAT/NHIL on real estates and duty on imported spare parts. In addition, government has replaced the 17.5% VAT/NHIL with 3% flat rate for traders. Government has also introduced tax credits and other incentives for establishments that employ young graduates from tertiary institutions and tax incentives for young entrepreneurs.
We share the view that some of these taxes were nuisance. The elimination of these taxes may spur the growth of businesses and raise the disposable incomes of Ghanaians. This is the way to go because blanket tax reductions do not automatically lead to job creation even as they reduce government revenues. We expect government to spell out the modalities (including detailing out the “other incentives”) for qualifying businesses to benefit from the tax concessions as soon as possible. Local businesses that hire young people must benefit from these incentives. Again, the role of Ghana Statistical Service and Labour Department are crucial in the implementation of all these measures. They need to be resourced properly to perform all these functions.
In our earlier submission we called on government to consider reducing personal income taxes (P. A.Y.E.). We had suggested that, government should raise the tax-free threshold to GH¢12,000 per annum (or GH₵1000 per month). Government seems to have ignored this suggestion. The implication is that even minimum wage earners will pay income tax. We urge government not to tax workers into poverty.
Industrial peace is necessary for the realization of the ambitious employment agenda outlined in the 2017 budget. There is the need for investment in the national institutions that are at the forefront of industrial relations and social dialogue if we are to achieve industrial peace. In our earlier submission to government, we lamented the underfunding of the labour administration institutions. We called on government to reverse the situation by investing in the labour market institutions including the National Labour Commission (NLC), Labour Department, Factories Inspectorate Department, Fair Wages and Salaries Commission (FWSC) and even the Ministry of Employment and Labour Relations.
For the 2017 fiscal year, the Ministry of Employment and all its agencies will receive GHC60.7 million for their operations. This represents 0.001 percent of the total appropriation bill and 0.04 percent of the allocations to the presidency. In Dollar terms, the 2017 allocation to the Ministry is about US$13.1 million compared to a budgetary allocation of the Ghana Cedi equivalent of about US$23 million in 2009. We cannot achieve industrial peace for economic growth if government continues to treat the ministry responsible for employment and labour relations as a non-priority ministry.
Over the years, we have highlighted the weaknesses in our pension system. Our view is that the low pensions are the result of low earnings, poor administration of pension funds and excessive government interference in the operations of SSNIT, especially. We called on government to give the National Pensions Regulatory Authority (NPRA) the autonomy it needs to effectively regulate the agencies in the pensions industry.
Instead of addressing the fundamental weaknesses in our pension system the Minister for Finance only indicated that the supervisory responsibility of the NPRA will move from the Ministry of Employment and Labour Relations (the current supervising ministry) to the Ministry of Finance. The only justification for this change is that “pensions are about finance”, according to the Minister. But pension is not only about finance. It is more about welfare of pensioners. In any case, the Social Security and National Insurance Trust (SSNIT) has remained under the supervision of the Ministry of Finance all these years but this has not prevented or cured the weaknesses in our pension system including the low coverage of pension schemes and low pensions. With the transfer of the supervisory responsibility of NPRA from the Ministry of Employment and Labour Relations to Ministry of Finance we can only envisage more government interference in the pension system that may gravely affect the operations of SSNIT, NPRA and second tier pension schemes.
* PRIVATISATION OF ELECTRICITY COMPANY OF GHANA (ECG) AND OTHER STATE ASSETS
TUC’s opposition to the intended privatisation of ECG is well known. In our previous submission before the budget was presented to Parliament, we urged the Akufo-Addo government to pull out of the Ghana Compact II programme if the Millennium Challenge Corporation was not willing to review the Compact.
The Minister for Finance indicated what could be considered a general government policy on “private sector participation” in State-Owned Enterprises (SOEs). We urge government to proceed with caution in its overzealous attempt to privatize strategic national assets. We would like to serve notice that the working people of Ghana and their unions will resist any attempt by government to privatize strategic state assets.
In the specific case of ECG, His Excellency, President Nana Addo Dankwa Akufo-Addo (in his State of the Nation Address), and the Honourable Minister for Finance (in the budget statement), assured Ghanaians that there will be “further dialogue on the key issues that have generated these disagreements” between labour and the Millennium Development Authority (MiDA). We would like to assure the Minister and the government that we are open and ready for dialogue. We call on government to activate the dialogue mechanism in respect of ECG privatization without further delay. We would also like to assure the Minister that one of the key issues that have generated the disagreements is the concession agreement itself. We find it extremely difficult to understand why Ghana must handover assets of ECG to a foreign private sector firm for 25 years. We also find it insulting to the good people of Ghana that the agreement between Ghana and the Millennium Challenge Corporation of the United States of America “will prevail over the domestic laws of Ghana” as clearly stated in Article 7.1 of the Millennium Challenge Compact.
The 2017 budget is an ambitious one that seeks to address the challenges confronting our country. It is consistent with the President Akufo-Addo’s statement that he is in a hurry to return Ghana to a growth path that will bring prosperity to all Ghanaians, irrespective of their sex or location. The budget has set growth target of 6.5 percent. We believe that the economy must be set on a growth path, as soon as possible. But the fundamentals must be right to sustain a rapid economic growth. We welcome the job creation initiatives, in particular, but we need to set clear employment targets to guide our actions. We will work with government and other stakeholders to support both the growth and jobs initiatives. The country requires a harmonious industrial atmosphere to advance the goals set out in the budget. That atmosphere also requires that all the social partners, particularly government, commit to and invest appropriately in the mechanisms for social dialogue in the true spirit of social partnership and mutual respect.
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