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02.11.2005 Business & Finance

Employment and earnings need attention in budget

Employment and earnings need attention in budget
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Accra, Nov. 2, GNA - Employment and earnings are two important areas that need further attention in economic and social development policy-making, the Trades Union Congress (TUC) has said in its input into the 2006 budget and financial statement.

According to the labour movement, despite the well-known and empirically-tested link between employment creation and poverty reduction, clear employment-related targets were usually missing from government's budget statements and economic policies. "Undue attention has been paid to inflation management in the past two decades on the false assumption that once inflation is controlled and other 'fundamentals are right', employment creation will follow and unemployment will fall.

"The reality is that during this period we have witnessed a declining share of the formal sector in total employment and a rapid expansion of the informal sector. The implication is that fewer workers are receiving protection at their workplaces." The TUC urged the Government to change this approach to macroeconomic management and focus on employment creation and distribution.

The TUC proposed a National Labour Policy, which should cover issues such as levels and distribution of employment, active labour market measures, productivity employment and social measures. "In short, we expect employment to receive equal attention paid to inflation, budget deficits, exchange rate, international reserves, and GDP growth rates in the annual budget statements."

The TUC said it was aware of the Government's plans to hold a job summit later in the year and pledged support for these initiatives and to play its role to ensure that employment issues were given the priority attention they deserved in the development policy agenda. On the textile industry, the TUC said it needed "committed response" on the issue on the budget.

It said the sector was one of the most labour intensive industries, which could be a great source of employment to the large army of the youth roaming the streets in urban centres.

It asked the Government to review its policy on the poultry sector and pointed out that it was unjustified for Parliament to use procedures on emergency legislation by the Government to repeal Act 641, which was duly passed by the House to protect the domestic poultry industry from unfair foreign competition.

"Act 641 was a consistent application of the rights of Ghana under the rules of the World Trade Organisation (WTO). We therefore expect clear policies and measures in the 2006 budget to deal with the issue." The TUC expressed support for the Government's initiative to promote cooperatives, saying it expected policies in the budget to reflect these and other initiatives towards the formalisation of employment through cooperatives.

This should also be done to create decent jobs for the unemployed youth and reduce underemployment that had characterised the agricultural and urban informal sectors.

"As a means of enhancing the capacity of the agricultural sector to create jobs for the youth, we urge the Government to provide the necessary technical and financial support for the sector, particularly in the areas of storage and price stability."

The TUC said work on productivity improvement should be accelerated and linked to work ethics.

On earnings, it noted that the current monthly minimum wage if 40 dollars was the highest since 1984 and this was expected to take the minimum wage earners above the internationally accepted extreme poverty line.

However, it said, a lot more should be done in order to achieve reasonable levels of earnings for workers and their families. It said the ongoing discussion on public sector salaries was in the right direction, adding that the benefits of enhanced public sector salaries in Ghana would be enormous given the potential positive multiplier effects on other sectors.

"After over 20 years of consistent GDP growth of over four per cent per annum, it is time for Ghanaian workers to earn a living wage. Organised labour led by the GTUC will officially table the living wage issue in the next round of the National Tripartite Committee consultations on the national minimum wage." On taxes, the TUC observed that the Government was relying heavily on indirect taxation despite the regressive nature of such taxes and asked that measures should be taken to widen the direct tax net to cover the informal sector.

It proposed that the tax-free threshold for personal income tax should be raised to 2.8 million cedis. The TUC said workers were currently being unduly overtaxed on their overtime earnings and proposed that a committee be constituted to deal with the matter as part of the preparation of the budget. It proposed the establishment of a tax policy unit at the Ministry of Finance and Economic Planning to ensure that the tax system was fair and efficient.

The TUC said it still stood for a stabilisation mechanism in petroleum pricing in order to avoid unexpected hikes that could create shocks in the economy. It asked the Government to set aside resources in the budget to support the Education Fund.

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