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Economist downplays effect of pay rise on IMF deal

A Labour Economist, Dr. William Baah Boateng has shot down any significant impact on Ghana’s commitment with the International Monetary Fund (IMF), over an increase in public sector wages.

According to him, the decision may have taken into consideration government’s commitment to maintain high fiscal discipline under the economic assistance program with the IMF. “At the negotiation table, I do not think government will offer the 121/2 percent at the onset; this would have been achieved after negotiating with labour who would have quoted a higher rate of increase,” Dr. Baah Boateng stated.

He added, “Government definitely knows that it can pay that is why it would have agreed to the 121/2 percent.”

The Public Services Joint Standing Negotiation Committee (PSJSNC) on Tuesday [September 13, 2016], announced a 121/2 percent increase in the salaries of all public sector workers on the Single Spine Salary Structure.

A statement on the decision, signed by the CEO of the Fair Wages and Salaries Commission (FWSC), George Smith Graham further indicated that the new increase will take effect from January 2017.

One of the concerns being raised by some economic watchers is the likelihood of the decision to distort government’s commitment not to overspend this year. But Dr. Baah Boateng explains the decision could not have been upheld if it didn’t fall within government’s means.

“On the government’s side there will definitely be a representative from the ministry of finance on the negotiation table as such any figure that the government cannot afford would have been opposed,” he remarked.

The announcement also comes at a time that Ghana is awaiting a release of the third tranche of the bailout cash from the IMF. Government is expected to present the fund’s review committee with data on the country’s energy sector which is considered as one of the critical factors of the economic deal.

Meanwhile Dr. Boateng maintains the margin of increase will cushion workers against any adverse impact of inflation which is anticipated to drop to 12 percent margin by the end of 2016. The increase in public sector pay comes barely a week after government announced a ten percent increase in the national daily minimum wage to be implemented in January 2017.

The figure has been increased to 8 cedis 80 pesewas from the current 8 cedis.

Source: citifmonline.com

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