The Institute of Statistical, Social and Economic Research (ISSER), University of Ghana, has advocated that wage increase in 2021 and beyond be moderate and based on cost of living differentials and productivity.
“We should not as Ghanaians be quick to jump on the streets asking for higher wages. Our demands, our negotiations should be based on cost of living differentials as well as improvement in our productivity, which should be justifiable,” Professor Peter Quartey, the Director of ISSER, stated on Tuesday in Accra in a review of the 2021 Budget and Economic Policy Statement of the Government.
“We have a high debt GDP (Gross Domestic Product) ratio and has been worsened by COVID-19 expenditures; we will want to see some medium term strategies to reduce debts to sustainable levels.
“I think we have to be serious with that because we’ve reached points where debt service as a proportion of total revenue is 49.5 per cent, close is 50 per cent; that is unsustainable, we ought to find ways of getting around this.”
He said in the 2021 budget, taxes had been increased aimed at boosting government revenue; stating that that would increase the cost of doing business, reduce private sector investment, decrease economic activity, increased incentive for tax avoidance, businesses might pass the increased costs on to consumers making households worse off.
Prof. Quartey said on the other hand, tax rebates, penalty suspension and tax waivers would reduce the cost of doing business, encourage employment and investment.
He noted that at one point in the budget government was taxing and at another point, giving tax rebates to cushion the people and said it was time to expand the discussions beyond the taxes.
Prof Quartey said the banking sector clean-up levy would certainly bring-up revenue to the Government, but that could also limit private sector access to credit and impact economic activity and employment.
Concerning the five per cent on profits of customers of banks, Prof Quartey said that would further constrain access to credit, because, when banks were taxed and they were less profitable, it could even affect their capitals and also affect how much they could give to the private sector.
He said that could also have negative effects on customers, credits and on the capitals of banks.
Regarding expenditure on infrastructure, Prof Quartey said that would shore up economic activity, saying, upgrading transport networks which was a need for the private sector, would boost demand and also increase labour productivity.
Concerning the COVID-19 Alleviation and Revitalisation of Enterprises Support (CARES) Programme of the Government, he said it would encourage entrepreneurship in agriculture and light manufacturing, enhance agriculture expansion and modernisation through the Planting for Food and Jobs and other related programmes.
He said it would help reduce food prices, increase availability of raw materials and moderate the effects on inflation and real income.
Prof Quartey said the Ghana Revenue Authority (GRA) revenue efficiency measure was something that Ghanaians should support and create awareness about because the country was not doing well in its tax revenue generation.