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Thursday, June 9, 2022
MATCHING WAGES
WITH PRODUCTIVITY
IT is that time of the year when employers
and employees are expected to lock horns
on how much pay is optimal to adequately
compensate the worker and also keep an
employer’s business running.
While the government is expected to
open negotiations with public sector
workers, private firms and other institutions
would be meeting their employees for a
consensus on what to do with their wages.
Although an annual ritual, this year’s
salary negotiations comes at a tricky time
for both sides.
It is at a time when inflation has taken its
run to an 18-year high, hitting 23.6 per cent
in April. Experts concur that the increments
would continue into the end of the year,
although they project that the pace of the
jumps might reduce.
High inflation is bad for the economy,
businesses and households. It raises the cost
of living for individuals, erodes the profits
and weakens the productivity of businesses
and ultimately undermines economic
growth and other fiscal indicators.
Inflation is also an avenue for employees
to demand higher pay to compensate for a
dimishing disposable income.
Already, workers have said that the
soaring inflation was eating away their
salaries and employers must respond with
immediate pay increases that were
commensurate with the pace at which
prices had risen.
They have said that salary increases
must be the same or higher than the current
inflation rate of 23.6 to avoid entrenching
what they termed “cost of living crisis facing
labour.” (see story on page 17)
The Secretary General of the Trades
Union Congress Union (TUC), Dr Anthony
Yaw Baah, told the Graphic Business last
month that optimal increments in salaries
were needed to make up for the price jumps
and curb the imminent poverty that this
development was pushing workers into.
Dr Baah, a labour economist, added that
public workers had endured enough in the
past under the guise of helping to rebuild
the economy and could no longer take
lower pay rises, with inflation now at an 18-
year high.
He stated that the union would be
approaching this year’s salary negotiation
with higher expectations, warning that any
attempts to raise pay by a lower rate would
not be entertained.
While the Graphic Business appreciates
the predicament of workers, we call for cool
heads even before the negotiations begin.
Agriculture deserves
more attention
By OSCAR UGOH
tHere is the urgent
need to take
concrete action to
support increased
productivity and
consequent production levels in
Ghana’s agricultural sector.
Agriculture has always been
recognized as crucial to Ghana’s
economic wellbeing although
public spending on improving
productivity and output in the
sector has always been grossly
insufficient.
Increased agricultural
activity can generate direly
needed jobs all around the country
and especially in rural Ghana which
needs them the most. It can create
wealth and alleviate poverty
nationwide as well.
In addition to this is its crucial
roles, both in import substitution
which can drastically lower Ghana’s
inordinate food import bill, and in the
provision of industrial inputs for the
manufacturing sector.
Agricultural output
Currently, though, increased
agricultural output is becoming even
more crucial than ever before for
several reasons.
Chief among them is that new
trade treaties with both the european
Union and the rest of Africa – the
latter through the African Free trade
Agreement which is now
commencing – means that tariffs on
food imports will be lower than ever
before and if we are not careful, we
will replace much of the food we now
produce locally, with imported
substitutes, which would cost us
employment and foreign exchange,
both of which are already in direly
short supply.
Another is that most of the over
200 manufacturing facilities being
developed under the government’s
one district, one factory flagship
initiative are agro processing facilities
and they will need huge amounts of
agricultural produce of various types
as industrial inputs.
thus the need to modernize
Ghana’s agriculture using improved
seed, all year round irrigation fed
farming and technology for the
impartation of crucial information
and knowledge has become more
urgent than ever before.
But all of these require financing
but simply put, Ghana’s agricultural
sector is not getting its fair share.
Policy initiatives
several public policy initiatives
are needed to change this situation.
one requires direct financing from
government itself. Past experience
however has shown us that
government’s direct financing of
“Government
is now
implementing
its industrial
subcontracting
exchange.
agriculture does not produce
commensurate results because loans
tend to be granted on basis of political
patronage rather than identified
capacity to use such financing
optimally.
related to this, many borrowers
simply refuse to repay such loans
because they regard them as public
monies to which they have a right to
get a share.
to get around this government
should promote and facilitate
communal agricultural co-operatives,
comprising groups of farmers. this
way, the likelihood of political
patronage aimed at individuals would
be greatly reduced, since a cooperative
usually comprises
individuals from diverse backgrounds
and political affiliations.
Furthermore, experience has
shown us that individuals who are
part of a group loan tend to meet their
repayment obligations because of peer
pressure and a desire to remain part of
the group.
Government’s fiscal space is still
tight so most of the requisite
financing will have to be sourced from
the private sector.
Attracting investors
to attract investors capital and
commercial lending, two things need
to be in place.
one is
identified
demand for the
farm produce.
Anyone putting
money into the
production of
any goods, wants
to be confident
that the goods
will be sold. In
the case of
agriculture this
consideration is
more important
than ever
because the
produce is
largely
perishable and
there is a severe shortfall of storage
space.
Industrial demand for
agricultural produce can guarantee a
large enough proportion of sales to
assure financiers and investors.
An example is the production of
sorghum, primarily in northern
Ghana, for Guinness Ghana Breweries,
an arrangement which enables the
state owned Venture Capital trust
Fund to finance the farmers involved
every year on a revolving basis.
We need to identify as many such
agricultural produce supply
arrangements as possible and sign
them up.
Government is now
implementing its industrial subcontracting
exchange. Facilitating
produce supply arrangements
between industry and farmers should
be made a key part of its mandate.
the other thing needed is a safety
net in case something goes wrong.
Agriculture has a natural
disadvantage in that it is the most
exposed of all sectors to the vagaries of
nature. Financiers need to be sure that
crop failures and the likes ill not wipe
their investments away.
this is where agriculture
insurance is vital. It is already being
offered on a limited basis by a pool of
local insurance companies in
collaboration with the German
development assistance agency, GIZ.
Importantly, it is a major part of
the impending new Insurance Law
which will enable its availability
nationwide. Government needs to
make every effort to facilitate and
accelerate this process.
the running theme here is to
ensure that the agricultural sector can
play its central role in a value chain
that works efficiently for a wide
number of stakeholders. only then
can it get the finance requisite to
support capacity that we know we
have with regards to agricultural
production.
Oscar Ugoh is a publisher and
public policy consultant