The Trades Union Congress (TUC) has served notice it will resist any “unreasonable increases” in utility and fuel prices.
Electricity tariff has gone up by 51.73%, the Public Utilities and Regulatory Commission (PURC) announced two days ago. Water tariff has also shot up by 15% for the third quarter of 2015.
The new prices took effect July 1, 2015.
According to the Labour Unions, the increases continue to affect the living standards of workers in Ghana and their families.
“Working people and ordinary Ghanaians cannot continue to absorb any further increases that lead to higher cost of living,” the TUC said in its mid-year review statement.
Below is the full statement:
The General Council of the Trades Union Congress (Ghana) held its 33rd Bi-annual meeting in Tema on 25th and 26th June 2015. The Council discussed, among other issues, the prevailing economic, social and political situation in Ghana with emphasis on the three-year IMF-sponsored Extended Credit Facility (ECF) programme and its implications for the working people of Ghana, in particular, and Ghanaians in general.
General Economic and Social Situation
The Council discussed the economic and social challenges facing Ghana, particularly in the last 3 years. Economic growth has slowed considerably and is expected to be around 3.5 percent in 2015, the lowest recorded growth in more than a decade. Inflation is rising faster than projected. In fact, for most basic products, the situation in our markets shows far steeper price increases than the headline inflation figures reveal. The Bank of Ghana has raised its policy rate ostensibly to curb inflation. This has increased the costs of borrowing for domestic businesses rendering most of them uncompetitive even on the domestic market. The current account deficit remains large and growing. The national currency, the cedi, continues its downward slide against all major currencies in the world.
These have imposed excessive economic and social costs on Ghanaians. Jobs are disappearing as domestic companies fold up or reduce operations to stay afloat. Most of our graduates have been without jobs long after completing their national service. With prices rising faster than incomes, the cost of living has become unbearable for the working people. Social intervention programmes such as capitation grants, School Feeding Programme, national youth employment programmes, Livelihood Empowerment Against Poverty(LEAP) and even the National Health Insurance Scheme (NHIS) intended to cushion vulnerable sections of the population are failing.
International Monetary Fund Bailout
In the midst of these challenges and after jettisoning the Senchi Consensus government turned to the IMF for “economic salvation”. In doing so, government recognised that it faces a credibility crisis and that it needed the IMF to fix that crisis. Foreign investors with short-term outlook would most likely be spurred by IMF programming to invest in short- to medium-dated government treasuries. But it is very unlikely for any investor to invest long-term in domestic production merely because of a three-year IMF bailout programme. Yet, Ghana requires long-term investment to grow the economy, to rebalance the current account, and to strengthen the cedi and, most crucially, to create decent jobs.
The Council holds the view that Ghana cannot develop on a “borrowed credibility”. What will happen when the programme ends in 2017? How would the current programme resolve the perennial fiscal irresponsibility that has become the hallmark of governments in Ghana? If past trends are anything to go by, then one would expect a return to the status quo where fiscal imprudence ushers this country into further fiscal austerity with or without the IMF-sponsored programmes.
The Council, therefore, called on government to address the governance and systemic policy failures manifested in pervasive corruption and impunity at the highest echelons of our society.
The IMF bailout programme will not change Ghana economic situation. In the last 16 years, Ghana has negotiated three different IMF extended credit facility programmes, similar to the current programme, and over 40 technical assistance programmes. These programmes have failed to address the vulnerabilities inherent in the Ghanaian economy. This is explained partly by the fact that IMF programmes, by their very nature, are short-term and do not deal with the structural rigidities that cause the economic challenges they seek to address. Additionally, and as we have seen it around the world, the IMF is obsessed with fiscal austerity to the point that it has failed in its analysis to distinguish between cause and effects of the economic crisis currently facing Ghana.
Public Sector Wages and Employment
The IMF calls for a “frontloaded fiscal consolidation”, including a reduction real wages. It is instructive to note that in all of Ghana’s programmes with the IMF, public sector wage cuts have been implemented as the immediate solution regardless of the causes of the economic challenge. Wage cuts have become the centerpiece of IMF programmes. But public sector wages are not the primary cause of inflation in Ghana. If public sector wages were the cause of inflation in Ghana, then the wage restrictions (in terms of public sector wage/GDP ratio) imposed on Ghana by the IMF and the World Bank in the late 1990s would have curbed inflation during that period. But, clearly, it did not. Data on inflation indicate that over 40 percent of Ghana’s inflation is due to the cost of food. Therefore, policies and programmes to address food production and distribution throughout the country would be the key to addressing the structural cause of inflation. The IMF is not interested in those policies and programmes. Instead, ifocuses on the factors that merely propagate inflation and inflationary expectations.
The IMF bailout programmes also requires limit on net hiring into the public sector and hints of a civil service reform including retrenchment. The Council’s view is that such reforms must not include retrenchment because that will be too costly nationally and for the affected workers and their families, in particular, given the precarious employment situation. The significant deficits in public service delivery in Ghana are partly due to human resource shortfalls in some sectors and in some parts of the country. It is, therefore, important that the reform considers the needs of the various public sector institutions and the possibilities of training and redeploying workers to under-staffed institutions.
Given the general economic hardships prevailing in the country, the Council finds it unacceptable that government would agree to reduce real wages despite the sacrifices public sector workers are making, including accepting a cost-of-living allowance in 2013 instead pay increase.
We would like to serve notice that the TUC, in collaboration with Organised Labour, would not allow a further decline in real wages.
Utilities and Deregulation of Prices of Petroleum Products
The Council discussed the negative effects of the recent increases in the fuel prices on cost of living and on businesses. The Council also noted that as part of the IMF bailout programme, it is expected that subsidies for utilities and petroleum products will be fully eliminated. We find it extremely difficult to understand why government would even contemplate further removal of subsidies and deregulation of fuel and utility pricing in the midst of such economic and social crisis. It is unacceptable for government to deregulate fuel and utility pricing while restraining wage increases.
We would like to reiterate our position that the TUC will not accept any reduction in real wages. In particular, we will continue to resist unreasonable increases in utility and fuel prices and other such policies and measures that undermine our efforts to improve the living standards of the working people of Ghana and their families. Working people and ordinary Ghanaians cannot continue to absorb any further increases that lead to higher cost of living.