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02.07.2005 General News

Pay Increase Must Not Exceed 4% -IMF

Palaver

Workers demanding 30%-50% — Civil/Public servants betrayed

Strike actions imminent

The J. H. Mensah Oversight Committee of Cabinet at its meeting held on June 7, 2005 observed that the negotiating process now taking place between the Government and its employees could reach a point of deadlock leading to industrial unrest in the coming weeks unless the Government adopted a different strategy.

According to the Committee, the agenda has been to deal with pay increases which were negotiated to the point of agreement in 2004 but whose implementation was halted. The promise had been given to make it up in Fiscal Year 2005.

However, the first outcome of this year's pay round is that by the end of June, all the affected workers would have received pay at rates higher than what they were receiving in 2004 by a factor of 18-19%. This constitutes the “reversion” element in the present negotiations. The second part of the agenda is to negotiate the quantum of another set of pay increases for Fiscal Year 2005 itself.

According to the J. H. Mensah Oversight Committee, the approved budget for Fiscal Year 2005 provides for a maximum of 25% increase in the Government wage bill. That ceiling has been incorporated as a critical Government of Ghana undertaking with the IMF and the World Bank for the year 2005.

The Oversight Committee recommended that out of the overall ceiling of 25% allowed for pay increases in the budget, a small margin of about 2%-3% has to be held in reserve for special adjustments in pay that may have to be made for special groups of public servants. It means that approximately, the Government's best offer in the second round of negotiations cannot go beyond an across-the-board increases of 2%-4% to make a total increase of around 20"-22% on last year's wage bill.

The Oversight Committee lamented that as against that limit, the Unions and Associations are putting forward very large initial claims (30%-50%) for fresh wage increases for Fiscal Year 2005. The political and Public Relations background to those demands is that 2005 is the year of 50% increase in petrol prices, which has fed into a steep rise in the cost of living, etc, the Oversight Committee reported.

The Oversight Committee felt that it was hardly possible to negotiate amicably between those claims and the 2%-4% margin available for Government representatives to offer under the overall 25% ceiling.

The Oversight Committee therefore suggested that in order to meet the undertaking to the IMF and the World Bank for the year 2005, the Government should negotiate by offering increases of 2%-4% margin this year and agree that any difference in the negotiated pay increase for Fiscal Year 2005 would be implemented in Fiscal Year 2006.

In other words, the same trick that was played on the workers last year that is making it impossible for any serious increases to be paid this year is to be played on them again this year too!

The Oversight Committee also noted that the practice of Heads of Institutions leading Collective Bargaining negotiations with their workers was unhealthy as they invariably ignored the political aspects of their negotiations.

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