Government issues White Paper on market premium
Government’s White Paper on guidelines for the determination of Market Premium under Single Spine Pay Policy (SSPP), was introduced as a pay administration system in order to attract and retain critical skills in the public service.
However, its introduction and implementation are to be driven by guidelines to avoid abuse.
The White Paper made available to the Ghana News Agency on Monday said a market premium is essentially an absolute amount paid only to employees with critical skills in short supply.
It is paid to attract and retain critical skills in short supply within the economy. It is envisaged to ensure that Market Premium is used as a tool to attract and retain critical skills in short supply in the public services and thus make available the mix of skills needed for public service delivery.
The objectives of market premium are to enable the public service compete favourably with the private sector for critical skills; and to enhance performance and productivity in the public service.
The document said market premium shall not be part of basic salary; shall be determined as an absolute amount and not as a percentage of basic salary and shall not be paid as inducement allowance as defined in the Government White Paper (November, 2009) on the SSPP.
“Market premium shall be payable to job holders performing a function using the scarce skills; shall be payable to job holders performing the core functions of the job requiring the application of the scarce skills and not in any other role; shall not be based on service classifications or occupational groups or jobs classified as essential services as specified under section 175 of the Labour Act, 2003 (Act 651) and as stated in regulation 20 of the Labour Regulations, 2007 (L.I. 1833).
“Market premium shall be determined by the Government and shall not be subject to negotiations; shall not be granted across board; Social Security shall not be paid on market premium; Market premium shall not be based on qualification, job description, job title, or grade or level but strictly on the scarcity of the skill; shall not signify the importance or superiority of the job; and shall be reviewed periodically,” the document explained.
It said market premium shall be determined by the F WSC in accordance with the FWSC Commission Act, 2007 (Act 737) and in line with the Government’s White Paper on the SSPP, within budget constraints of the relevant Ministry, Department or Agency.
“In determining the market premium, the FWSC Commission ion shall in consultation with the Ministries responsible for Finance and Employment and Labour Relations undertake research to inform market premium determination as and when appropriate; Identify the critical but scarce skills or jobs in the public service; determine the amount of the market premium; determine the duration for which the market premium shall apply; and take cognisance of budgetary allocation for compensation of employees.
In determining the amount of the market premium a number of factors shall be considered including the degree of scarcity of the skill or job in relation to Government’s priority for the reference period; and the ability of Government to pay.
It is also based on Government’s priorities, the list of scarce skills and jobs shall be published in a Gazette.
“With the issuance of the guidelines for determination of the market premium, the interim arrangement on market premium currently in existence is discontinued.
Without prejudice to paragraph (a) and for the avoidance of doubt public service employees who are currently on the interim market premium shall continue to receive the absolute amount of the 2012 interim market premium.
“The arrangement referred to in paragraph (b) shall continue until the market premium is determined in accordance with the guidelines.
“The interim market premium shall cease to apply upon the determination of the applicable market premium under the Single Spine Pay Policy.
“These guidelines on market premium supersede all previous agreements or memoranda of understanding on the subject.”
Government acknowledges that the attraction and retention of the right mix of skills to deliver public goods and services is central to its overall human resource strategy.
“Government recognises that, market premium should be used to attract and retain critical skills which are in short supply, endorses the provision in the guidelines that market premium shall be determined as an absolute amount and not as a percentage of basic salary.
Government further accepts that market premium shall not be part of the basic salary and for that matter Social Security shall not be paid on it, accepts the guidelines for identifying critical but scarce skills and jobs which qualify for market premium.
Government accepts to identify critical but scarce skills and jobs for a reference period, based on its priorities, and to publish in a Gazette those skills and jobs.
“Government accepts that market premium shall be paid only to identify critical but scarce skills and jobs in the public service institutions specified under Article 190 of the 1992 Constitution and which subsist on the Consolidated Fund, except those under Article 71 of the 1992 Constitution and the Ghana Armed Forces. Government endorses the provision in the guidelines that market premium shall not apply to all jobs within a particular service classification or be granted across board.
“Government acknowledges that market premium shall be determined for critical but scarce skills and jobs through the conduct of comparative salary surveys. Thus, Government endorses the recommendation that it shall not be determined through negotiations. Government, therefore, endorses the collaboration between Fair Wages and Salaries Commission, the Ministry of Finance and the Ministry of Employment and Labour Relations to undertake the required research to form the basis for determining market premium. Furthermore, Government accepts that period reviews of market premium will be guided by the research findings.”
The White Paper acknowledges that an interim arrangement had to be put in place to address the difficulties associated with the migration of some sectors within the public service onto the Single Spine Salary Structure. Government accepts that with the development of guidelines for the determination of market premium the interim market premium arrangement shall be discontinued.
It accepts that employees who are currently on the interim market premium arrangement will continue to receive the absolute amount of the 2012 interim market premium until the market premium is determined in accordance with the guidelines. Government accepts that the interim market premium arrangement shall be automatically terminated upon the determination of the applicable market premium.
“Government acknowledges that market premium for critical but scarce skills and jobs, when determined, will result in increased employee compensation cost. Government therefore accepts the provision in the guidelines that in determining market premium, cognisance shall be taken of the resource envelope of the country or the government’s ability to pay.
“Government recognises that to solicit support and cooperation for the implementation of the Guidelines on market premium, there is the need to educate the public. Government, therefore, accepts the provision in the guidelines that the Fair Wages and Salaries Commission collaborates with the Ministry of Finance, the Ministry of Employment and Labour Relations, and the Ministry of Information and Media Relations to organise public sensitisation programmes and workshops.
The document appreciates the valued cooperation and collaboration of its social partners. In furtherance of this cooperation, it will support intensive public information, education and communication campaign on market premium by the FWSC, and other social partners, including the Ministry of Information and Media Relations and the leadership of organised labour and associations.
The White Paper said for many years, the public service has been competing with other public sector institutions and the private sector for the supply of skills.
There has been consistent movement of individuals with requisite skills from the public service to other sectors as a result of wide disparities in the conditions of service.
The result has been shortage of critical skills needed for effective and efficient service delivery in the public service and there was an urgent need to improve performance and productivity in the public service.
Various pay reform initiatives have been undertaken in the past to address the issues, including the enactment of the FWSC Act, 2007 (Act 737) and the establishment of the FWSC.
The Commission provides the legal and institutional framework to holistically address the issues. “Section 3 (k) of the FWSC Act, 2007 (Act 737) enjoins the Commission to develop a mechanism within the public service salary system to attract and retain critical skills.
“In the attempt to achieve equity and transparency in the pay administration system in the public service, the Government of Ghana introduced the Single Spine Pay Policy. This policy which took effect from 1st January, 2010 is to be implemented in phases over a five-year period.
Government expressed gratitude to all social partners, especially organised labour, for their patience and co-operation in working together to further enhance equity and transparency in the on pay administration system