Friday, May 30, 2008


The Ghana Employers Association (GEA) has called for a flexible wage system based on productivity to replace the current system of fixed wages in the country.
It has also called on the government to develop appropriate and comprehensive policies to facilitate wage restructuring.
The GEA said within the confines of the Labour Act (651) the introduction of a flexible wage system tied to productivity would enhance business and ensure industrial harmony.
Moreover, it said, that would enable a closer link between wages and productivity to enhance competitiveness and promote employment stability.
These and other suggestions were contained in a study conducted by the association with support from the International Labour Organisation (ILO) on the accuracy and validity of a World Bank Publication titled “Doing Business Report”.
The IEA’s recommendations were disclosed at a stakeholders meeting in Accra yesterday.
The publication, one of the best known publications of the World Bank, is used by investors in deciding where to invest, with the terms and conditions of employment in countries a key factor in investment decisions.
The application of the report to developing countries has been contentious as some have said it does not reflect what pertains particularly in Africa which has its peculiar labour market.
The GEA/ILO study was, therefore, a result of that and a desire to come out with appropriate indicators on employment and labour, regulations and policies to advise government for appropriate polices to enhance the participation of the private sector in development and strengthen support for the growth of enterprises in the country.
The study focused particularly on the “Employing Worker Indicator”, and analysed its implication within the Labour Law, employment practices, regulations and polices in the country.
A comparison of results of the study with the Doing Business Report showed that the indicator that measured the difficulty of hiring workers dropped from the published level of 11 to 22, with a higher indicator signalling a more rigid system.
The indicators measuring the difficulty of dismissing workers and the rigidity of working hours remained unchanged.
The overall indicator of employment rigidity rose from 34 to 37 which brought Ghana from 120th to 138th among the 178 countries, signalling to investors that Ghana was slightly more rigid in employment although the overall ranking of ease of doing business dropped from 94th to 87th position.
Other results from the study showed that the lack of appropriate productivity indices at the sectoral and national levels made it difficult for productivity to be factored into the setting of the minimum wage, which most respondents saw as an effective policy tool for reducing wage inequality and poverty.
The lack of productivity indices also prevented a majority of informal sector operators from supporting the economy with increased labour productivity.
The study also proposed, among others, the strengthening of existing policies for promoting on-the-job training and apprenticeship aimed at raising the level of skills on the labour market and the development of labour regulation policies for the Small and Medium Enterprise (SME) Sector to provide the necessary flexibility and protection for enhanced productivity and job creation avenues.


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