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IMF calls on Ghana government to control ballooning wage bill

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cediThe International Monetary Fund (IMF) is calling on the Ghana government to control the rising wage bill which could affect the country’s transformation agenda.

Ghana’s wage bill rose by 47% in 2012 and this has had a toll on the country’s economy. The rise in the wage bill was due to the implementation of the single spine salary structure scheme.

The migration of public sector workers onto the Single Spine Salary Structure (SSSS) has so far cost the state GH¢6 billion, the Daily Graphic reported July 18, 2012 citing Chief Executive of the Fair Wages and Salaries Commission (FWSC), Mr George Smith-Graham.

The International Monetary Fund (IMF) is warning Ghana over the wage bill as it keeps ballooning.

After assessing Ghana’s economic indicators during a visit, the IMF in a statement April 12, 2013, said if the rising wage bill is not tamed, it will bring debt to levels that “could endanger the government’s transformation agenda”.

The Washington–based Fund has therefore urged the Ghana government to control the wage bill.

“The mission urged the government to gain control over the wage bill,” said the IMF.

The IMF recommends a “thorough audit” of the 2012 payroll and welcomed the fact that the government has “already started this process”.

The IMF indicates that deferred wage payments from the single spine salary reform were twice the level included in the supplementary budget.

The IMF mission said it strongly supports the government’s ambitious transformation agenda, centered on economic diversification, shared growth and job creation, and macroeconomic stability.

It notes that rebuilding buffers to safeguard stability is now the immediate priority. “This requires lower budget deficits to contain external pressures and keep debt sustainable, added the IMF.

By Ekow Quandzie

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3 comments

  1. SOONER THE GOVERNMENT AND LEADERS GET IT THE BETTER THIS COUNTRY WILL BE. WE ALL SEE GREECE, PORTUGAL, SPAIN BALLOONING DEBTS AS WELL AS OTHER NATIONS IN EUROPE ONCE PRICES OF RESOURCES GO DOWN SUCH AS OIL, GOLD GHANA WILL BE IN TROUBLE INCLUDING COCOA. THE ONLY THING THAT WILL SUSTAIN THIS COUNTRY WILL BE COMMERCIAL AGRICULTURE,COMPUTERIZED TAX SYSTEM AND SANITATION.

  2. I think if the government doesn’t take care it will run the nation into severe economic crises and serious measures must be taken to address this issue as the imf has said.

  3. Here is a quick and dirty starting point for cutting down the wage bill:

    Remove all the following governmental organizations from Government funding of payroll, and subventions:

    1. All tertiary business schools and polytechnics from government funding: Business Schools / Departments of All Public Universities (Legon, KNUST, Cape Coast, All of University of Professional Studies, etc. They charge enough fees to make it on their own without a penny from government. MANY OF THEM HAVE BEEN PAYIG RICH BONUSES TO STAFF AND FACULTY EACH YEAR (OR EVEN SEMESTER) FROM THE FAT FEES THEY CHARGE. Besides, they should practice what they preach – including business and entrepreneurship. If GIMPA can survive and THRIVE as a mostly market-rate, fee charging institution without government funding of salaries (after a transformation from a fully- subvented organization), then most public sector universities can (at least for most of the courses they run).

    2. All staff and faculty of Public Universities and Colleges that run Extension Courses, Sandwich courses, and similar programs. This includes all / most of University of Cape Coast Departments, Lots of University of Ghana departments, and same for KNUST. These additional programs are raking in loads of money – enough to make millionaires of staff collecting multiples of their regular pay from extra teaching.

    3. All governmental agencies making more Internally Generated Funds and fees than their payroll budgets. This approach should rake in a surprisingly large number of agencies. The fact is that they are already making from multiple IGFs, fees and charges, more money than they need for salaries. Why should we have to pay them salaries.

    4. All state owned enterprises that are supposed to generate revenues but have not been doing well.

    5. Any governmental agencies with potential to be financially independent. Give them six months to be ready; It will yield surprisingly creative and fast solutions to any lethargy they have had in the past.

    6. Start scouting ways to make (divisions) of the big money-sucking sectors become partially (target 50%) self sustaining: education, health, etc.

    7. Invite ideas (with a small incentive for winning ideas) for how to rapidly wean off other sections of government in six months or fewer.

    8. Stop debating whether to wean off agencies. Move quickly to how to do so and enable agencies to transform in 6 months of fewer.

    9. Target to make 30% of current government workforce contingent workers: temporary, part time employees,

    10. Farm out to the private sector a target of 50% of non-core government services, with obligation by the acquiring private sector organization to CONSIDER current workers where they are deemed QUALIFIED AND NECESSARY. This should include such services as DVLA, ALL Catering / Canteen and Food Services, Custodial / Cleaning / Maintenance Services, Repair and Replacements Services, Transportation Services, Traffic control, security, etc., Land title registration and related services. Many of these are already creative in how to make money for private pockets. They can be creative without making us pay multiples of the official fees into private pockets. Any private agency not doing the work well, or taking bribes to do them, should be replaced (together with their staff).

    11. Let GBC pay all salaries from fees it generates, like the host of competitors it now has. It has more resources than any other single broadcasting organization.

    12. More suggestions to come…..