Upward pension age review not feasible – Employment Minister

Minister of Employment and Labour Relations, Ignatius Baffoe Awuah

… points to high youth unemployment as reason

Calls on government for an upward amendment of the 60-year retirement age is prudent, but data on unemployment and relatively low life-expectancy do not support such a call, Minister of Employment and Labour Relations, Ignatius Baffoe Awuah, has said.

According to him, even though government has implemented a number of policies to better the lives of citizens and through that increased the life-expectancy age, the number of unemployed youth in the country is still worrying – and any move to increase the pension age now would mean more youth will have to wait a bit longer before entering the job market.

“You would normally link your pension regime with your life-expectancy. You will agree with me that in Europe they have a longer life-expectancy than Ghana, and so when our life-expectancy increases significantly we may have to look at this.

“Given the fact that we may also have a large number of unemployed persons waiting to be engaged, there is a debate. Would you like to keep your old workforce at the workplace and then allow the young blood to remain on the water-bank, or you would like to give space to the young ones?” Mr. Baffour Awuah asked. He was speaking on the sidelines of the 60th Annual General Meeting of the Ghana Employers’ Association.

Ministry open for deliberation

Despite his stance on the idea/proposal, he added, the ministry is open for discussion on the matter to find how best to handle the proposal, as some say it would lead to increased capital for pension funds to expand and restructure their operations.

“Certainly, what we seek to do every day in our lives is to have a better life. As we have a better life as a result of good policies, you get good public health care and people live longer than before; so, our life-expectancy is moving up.

“But you’ll agree with me it hasn’t reached the level of our European counterparts. They have the luxury of increasing their working years; but as for us, it is not for me to decide it is a debate we should all contribute to. If the nation at any point in time finds it suitable to increase the pension age, so be it; we will work with it as a policy,” the minister added.

Mr. Baffour Awuah said that just as government this year announced new rules to guide post-retirement contracts for academic staff of public universities in the country after several deliberations, so it is open for a case to be made for amendment of the retirement law.

Under the new rules for academic staff of public universities, even though the mandatory retirement age for academic staff of public universities shall continue to be 60 years, professorial grade staff (Associate Professors and Professors) will be eligible for post-retirement contracts until the age of 70 – in line with constitutional provisions.

But economist Professor William Baah Boateng and the Ghana Employers Association insist the time is right for the country to take a re-look at its retirement age.

According to Professor Baah Boateng, who is head of the University of Ghana’s Economics Department, many people are retiring at the age of 60 but can offer the labour force more to accelerate economic growth; therefore, government and stakeholders must find a way to utilise their energies for nation-building.

Life-expectancy data

The current retirement age is 60 in accordance with the National Pensions Act, 2008 (Act 766), as amended by the National Pensions (Amendment) Act, 2014 (Act 883). This means that at age 60, public and private sector workers are expected to stop active work unless there are special dispensations created for persons with some unique skills.

According to macrotrends.net, for the past decade Ghana’s life-expectancy has been on the ascendency. From 60.81 years at a growth rate of 0.56 percent in 2010, it has risen to 64.17 years at a growth rate of 0.4 percent in 2020. The current life expectancy of 64.17 years is a 0.4 percent increase from 2019.

Unemployment Data  

The total unemployment rate in Ghana has reduced by some 3.5 percentage points, despite the devastating effects of COVID-19 on the job sector and economy at large.

At a ‘Meet the Press’ recently, Mr. Baffuor Awuah – Minister of Employment and Labour Relations, pointed to a report of the 7th Round of the Ghana Living Standard Survey (GLSS7, 2019), which states that the total unemployment rate for Ghana is 8.4 percent as compared to the unemployment rate of 11.9 percent reported in the GLSS6, 2015 – a reduction of 3.5 percentage points.

This rate is higher among females (9.2 percent) than males (7.5 percent). In terms of regions, Greater Accra recorded the highest unemployment rate of 11.8 percent followed by Ashanti (10.3 percent). The Volta Region recorded the lowest unemployment rate of 5.8 percent, followed by the then-Brong-Ahafo Region (6.0 percent). The youth unemployment rate has also declined from 16.9 percent as reported in the GLSS6, 2015, to 12.6 percent as reported in the GLSS7, 2019.                         

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