Dr. Kwabena Nyarku Otoo
The Trades Union Congress (TUC) has raised concerns over the determination of wage increment for public sector workers by the country’s inflation rate.
According to the organized labour group, the trend which has existed since 2013 is worrying as it leads to the situation where the real purchasing power of workers actually declines.
“So even if you had a 10 per cent salary increase, but inflation is 15 per cent you have weaken the purchasing power of your wages because from the word go, your wage increase is not matching the level of your price increase and that is what is reflected in the real wage,” said Dr. Kwabena Nyarko Otoo, Director Labour Research Policy Institute (LRPI) of TUC.
Dr. Otoo was speaking at the TUC leadership forum on the 2021 mid-year budget review in Accra.
He explained that salaries or wage increase in Ghana is heavily dominated by the inflation figures adding that it explains why the government appears to be doing everything to bring down inflation.
“Somehow, because the government thinks inflation is the main element for determining salaries, they have been so focused on brining inflation down but we need to do some other work to ensure that we bring other variables like the cost of living,” he said.
Dr. Otoo explained that although interest rate is coming down generally, living standards are high indicating that it is time the country started looking at other variables like rent, in determining wage or salary increment.
“The inflation as a whole may be looking at a downward trend but rent prices on its own could be rising, so we cannot base the salary increment on only the inflation rate” he stated.
He also called for the need to classify the population into different segments when determining the pension pay as relying on only the inflation rate may be misleading
“If you use inflation as a whole to determine pension pay for example you could be making a mistake because the pensioners face a different price structure compared to those of us working.
They now have high health bill so even in some jurisdiction they calculate inflation for different segment of the population. We need to open it up such that we bring in some of the individual cost items so that we significantly affect people,” he said.
He, thus, suggested that the State funds institutions the Ghana Statistical Service (GSS) to collect labour market information for accurate salary and pension wage pegging.
By Jamila Akweley Okertchiri