Labour, Government clash over hardships

Organised Labour on Sunday demanded of government, a number of actions to reduce “the hardships workers and their families have had to endure especially in the last two years or so”, to demonstrate it is sensitive to, and cares about, the plight of Ghanaians.

The list of demands include the outright suspension of “all taxes and levies on petrol, diesel, LPG, and Kerosene until the international price of crude oil and the value of the cedi are stabilized.”

Doing so “in these challenging times”, according the Secretary General of the Trades Union Congress, Dr. Yaw Baah, will not only “bring down prices of fuel products and ease the burden on Ghanaians”, it “will also demonstrate to Ghanaians that our government really cares and it is sensitive to the plight of the good people of Ghana.”

The occasion was the 2022 National May Day Parade at the Black Star Square in Accra, held on the theme: Protecting Jobs and Incomes in an Era of COVID-19 and Beyond.

Other demands of Labour included a request for the government to “consider reviewing the method for fuel pricing because the current method is unfair to consumers”, as well as “consider revamping the Tema Oil Refinery (TOR) to refine petroleum domestically” to “insulate us from the high fuel prices due to exchange rate fluctuations.”

Labour also wanted the government to fight inflation and its attendant high cost of living, which have led to many workers and their families falling into poverty, or many more will suffer severe poverty in the coming months.

Also, workers need to be paid a living wage, and it is also time to index the salaries of private and public sector workers to inflation, in order to avoid worsening living standards. All these, plus a lot more, he explained, ensured that while all workers should have been happy on May Day, unfortunately, that was not the case.

President Akufo-Addo who spoke immediately after the workers concerns, provided immediate responses to the calls, reminding workers of the many interventions government has had to make to secure jobs and incomes, chart a path out of the ravages of COVID-19, and why workers need to be cautious in their demands in order not to put undue pressure on the national kitty, and how unrealistic it is to suspend all taxes on petroleum products.

“Secretary General, I took note of the observations and recommendations you made in your address," said the President" "especially of the challenges facing Ghanaian workers in particular, and Ghanaians in general, which I will like to make a few comments.

“It is important to put on record at the outset, that when COVID-19 struck and public sector workers in some countries were either losing their jobs or getting reduced salaries, my government continued to pay the salaries of public sector workers without any reductions, and we ensured that no public sector worker lost his or her job. It cannot therefore be said that my government does not care about the plight of the Ghanaian worker.

“I’ve also acknowledged on several occasions that we are in difficult times, and government has not thrown its hands in despair, and it is not looking for the easy way out. On the contrary, we are working hard to address the current challenges facing the economy and those that relate to improving the quality of life for all Ghanaians.

“I will be the first to admit that conditions of service in the wider public service needs improvement, however, these should be done within budgetary constraints to ensure that we do not put excessive pressure on our public finances,” the president counseled.

The President explained that in 2021 for example, government spent GH¢31.7 billion on employees’ compensation - wages and salaries, pensions, gratuities and social security.

He said the amount was paid out of a total tax revenue of GH¢56.5 billion, explaining that payment for 700,000 public sector employees alone absorbed 56 per cent of tax revenues for 2021, noting also that the fiscal impact is even starker considering the three largest expenditure items of employees compensation, interest payments, and statutory funds which amounted to GH¢81.3 billion representing 144 per cecnt of tax revenue in 2021.

“This means that the total tax revenue is not enough to meet our commitments on compensation, interest payments, and statutory funds as we have to resort to non-tax revenue and borrowing to be able to meet these obligations,” the President reminded workers on how rigid the national budget is, calling on labour and employers to support government in addressing the challenges.

President Akufo-Addo also responded to the issue of petroleum taxes, saying the suggestion to remove them is not sustainable.

“On the vexed matter of petroleum price increases, the suggestion has been made which has also been repeated by the Secretary General, is at this moment, not sustainable. Removing taxes on petroleum products will reduce government revenues by some GH¢4 billion. At this time, when we are determined to expand government revenues in order to increase our capacity to finance our own development, can we afford to reduce government revenues by GH¢4 billion?

“Government is currently confronted by very tight financing conditions, in the wake of inadequate domestic revenue mobilisation. Indeed, some of the revenues from these same taxes on petroleum products is what is used to pay some of the salaries of some of the 700,000 public sector workers on government payroll. We are addressing the issue of fuel price increases by implementing measures that are succeeding in stabilising the exchange rate, a key determinant of fuel prices. Government is also working hard to ensure reliable supply and availability of petroleum products, thereby preventing shortages, a phenomenon which is being experienced in some other neighbouring countries. By the same token, we are keeping the lights on in Ghana despite all the difficulties our economy is going through.

“We should bear in mind, that even though we are a modest producer of crude oil, with a current output of 148,000 barrels per day, we are still a net importer of petroleum products. We, therefore, continue to be vulnerable to the price volatilities of the world market for petroleum products. Nontheless, intense efforts are being made to rehabilitate the Tema Oil Refinery to enable it contribute to stabilizing petroleum prices which should see the light of day very soon.”

He cautioned against taking ad hoc measures that give only temporary reprieve but worsen the situation eventually.