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26.03.2009 Business & Finance

GRC to lay-off 1,000 workers... to save if from collapse

By Stephen Odoi Larbi - Ghanaian Chronicle

Investigations conducted by The Chronicle have revealed that the Ghana Railways Company (GRC) is considering a massive retrenchment exercise as a result of the poor performance of the company and the effect it is having on the economy.

One thousand workers, out of the current workforce of 3,500 are, therefore, expected to go home with the bulk of them coming from the Eastern railway line. Revenue generation of the company has dropped to its lowest ebb of 10% over the past years. As a result of this, management could not pay the End of Service Benefit to some of the workers who were laid off sometime ago.

Currently, the company derives the bulk of its income from the haulage of minerals on its Western line. The immediate past government was supporting them with GH¢326,000 a month, which was not enough.

There seem to be a growing level of instability on the employment market, and just last week, one of the local newspapers reported a move by Vodafone-Ghana Telecom to compel about 850 of its staff to go on an early voluntarily retirement. This, according to management, will enable the affected workers to benefit from a customized transition support programme instituted by the company. Already, some public and private institutions are feeling the heat of the global economic downturn.

One of the major interventions adopted by these public and private institutions is to scale down the size of their human resource capacity as a means of cutting down on expenditure.

According to the Minister of Finance, Dr. Kwabena Dufuor, in the 2009 budget, non performing State Owned Enterprises (SOEs) would be closed down whilst pragmatic measures would be adopted to save those in good standing. This he said would save the economy some money as it is already facing some challenges.

Recently, the former Minister of Ports, Harbours and Railways, Prof. Christopher Ameyaw Ekumfi appealed to President John Evans Atta Mills to urgently address issues affecting the railways sector in the areas of the workers conditions of service, payment of end of service benefit to redundant workers, as well as honouring its tax obligation.

The Ministry of Ports, Harbours and Railways together with the Aviation Ministry have now been merged with the Transport Ministry with the sole aim of cutting down government expenditure by President Mills. In an interview with the Minister of Transport, Mr. Mike Hammah recently in Accra , he confirmed the massive job cut

at the Ghana Railways Company considering the sector's inability to generate enough funds to run its operations, thereby posing a challenge to the government.

“We are running a parallel programme to ensure that there is a cut off point so that workers who are not productive, workers who are receiving salaries for no work done, we will have a way of probably making them redundant”, he noted.

According to him, workers who would not be affected by the exercise would be re-trained and retooled to be more efficient as part of the company's restructuring plans to inject life into its operations.

He said government in its short and medium term would find money elsewhere to immediately pay all outstanding salaries of the railways workers before it goes ahead to implement its plan.

He said, since the Western rail line was the only source of generating funds for the Ghana Railways Company, government would do everything possible to rehabilitate that corridor to improve on its internal generated funds. “For now, the line is moribund. It has to be rehabilitated to improve on its internal generated funds to pay salaries”, he said.

The Western rail line has for the past decade received much attention from government to revive that corridor, but no serious investor has come forward to partner with government to give it the needed facelift. A number of groups including Spoornet of South Africa and Kampac Oil ME, a Dubai-based oil firm had shown interest back in 2003 and 2007 respectively, but failed in their bid to secure funds for the project. Other institutions have also turned up but none seems to be in good financial position for the task.

This, according to Mr. Mike Hammah, has come about because the country was not having a Transaction Advisor to advice the government right from the onset to determine the capacity and capability level of these investors. “Once the Transaction Advisor was not in place, it was difficult for the Ministry to really assess the capacity and capabilities of the company. That is why so many years along the line, the investors that showed up could not meet the financial clause”, he said. He was, however, happy for the passage of the Railways Act which now separates the regulatory aspect from the commercial activities of the company. With the passage of the Railways Act, the Ghana Railways Development Authority now has the mandate to plan, develop and to manage the activities of the sector. It also has the mandate to look at security and safety aspects of the operations of the company. Hon. Mike Hammah however reiterated government's commitment to continue its support to the sector to make it more vibrant than its current position