Last Friday, in his May Day speech, delivered at a virtual commemorative event, President Nana Akufo-Addo put paid to hopes, at least for now, that government would offer fiscal incentives to companies agreeing to recall workers they had laid off recently in response to the financial challenges thrown up by the impact of the coronavirus pandemic. Many labour industry stakeholders, employers and employees alike, had hoped that the offer of tax relief for companies willing to keep jobs intact, despite their financial difficulties, would be used to save jobs at a time that the impact of COVID-19 is threatening to leave hundreds of thousands of Ghanaians unemployed by the time it subsides.
To be sure, this newspaper empathizes with government for its reluctance to incur further tax revenue losses at a time it is seeking to navigate already identified public revenue losses and extraordinary public expenditure increases, that combined amount to some GHc9.5 billion. Obviously, having done the requisite math, it has realized that the suggested tax relief would far exceed the value of whatever fiscal benefits government would recoup from the workers kept in employment.
However we believe that it is worth preserving as many jobs as possible, even at great cost to the public treasury. More jobs not only give the workers an income, but it relieves their families and friends of the burden of supporting them as well. Thus, every one gains from job creation.
The President rather pointed to data from recent Ghana Livings Standards Surveys that indicate a lowering of the country’s unemployment rate from over 11 percent in 2015 to 7.3 percent by 2019. While no one really believes those statistics – unemployment was obviously much higher in both years – the resumption of strong economic growth over the past three years has certainly opened lots of new employment opportunities.
However COVID 19 has the potential to not only reverse the gains of the past few years with regards to employment – it could easily leave Ghana with its worst unemployment situation in decades if it persists much longer.
Consequently we retain the hope that if financial support for government intensifies – such as savings through the suspension of US$500 million in bilateral official debt servicing payments, as well as contributions into the COVID 19 trust fund – it will reconsider its position.
In the meantime, we suggest a fall back position.
This is that any support to private enterprises through state sponsored or otherwise facilitated initiatives be tied in part to existing jobs retention and new jobs creation. Thus for example, it should be made a condition that beneficiaries of the GHc600 million in soft loans about to be disbursed to small and medium sized enterprises, should not lay off more than a certain maximum percentage of their respective work forces. Indeed, those willing to retain all their staff, or actually expand their work forces should be given priority over those who are laying off staff.
This may not be the most financially efficient path for beneficiary enterprises. But we hold the view that the ultimate goal of economic productivity is improved living standards for the majority of the populace. It is instructive that until recently, when inflation targeting became the fashionable strategy for central banks worldwide, one of the main goals of monetary policy was full employment.
In Ghana’s current predicament, minimizing job losses would serve just as well.