The Trades Union Congress (TUC) is recommending that the stimulus package should match the estimated output loss in terms of decline in the growth of GDP.
“We would like to add that the national economic response must be proportionate to the scale of the human, economic and social costs arising out of the pandemic. We expect the stimulus package to match the magnitude of the projected decline in GDP”.
GDP growth is expected to decline from 6.8 to 1.5 percent in 2020 as a result of the economic impact of COVID-19. “This translates into an output loss of over GH¢18billion (US$3.1billion), and therefore we expect government to inject at least US$3.1billion or GH¢18billion into the economy between now and December 2020.”
Government earlier announced that it will provide GH¢600 million to support SMEs as part of measures to mitigate the economic impact of COVID-19 on small, micro and medium-sized enterprises.
The umbrella-body of 18-affiliate unions in the country is therefore calling for a massive stimulus package for businesses and workers.
“Without this, the economic and social costs of the pandemic will be immense and long-lasting,” it notes.
The TUC says it fully associates itself with the following recommendation by the Ghana Employers Association (GEA) – that government should quickly develop and implement a comprehensive Economic Response Strategy (ERS) to deal with economic impacts of the COVID-19 pandemic.
“This will require stabilisation and stimulus packages for businesses and households to reduce impacts of the pandemic on the economy.”
Secondly, in order to avoid serious supply chain disruptions, government should identify and support local enterprises which produce raw materials that can feed local industries.
Additionally, government should arrange with commercial banks to ensure businesses are allowed by banks to access credit facilities under more flexible conditions.
The TUC is also recommending that government adopt the German Work Sharing Scheme, known in German as Kurzarbeit, as a way of preventing mass lay-offs in the formal sector.
During the 2008 financial crisis, unemployment did not rise in Germany as it did in other major economies around the world. The reason for this superior performance is the German system for supporting distressed businesses and their workers, the TUC notes.
“Companies that declare financial distress receive government support which enables them to pay their workers. Government then provides financial support that enables the company to pay the workers up to two-thirds of their wages.”
Many European countries have adopted the Kurzarbeit-style arrangements when confronted with crises that threatens employment. Britain, Denmark and France have all adopted similar schemes.
The TUC believes now is the time to introduce Workers Compensation Insurance in preparation for future pandemics.