Low productivity a serious challenge – GEA

Low productivity

Low productivity is becoming a serious challenge for businesses in Ghana, impacting adversely on enterprise competitiveness, especially in the wake of the African Continental Free Trade Agreement (AfCFTA), Director, Industrial Relations of the Ghana Employers Association (GEA), Joseph Kingsley Amuah, has said.

“It is sad to note that productivity and its attendant growth have not been given much attention in this country,” Mr. Amuah stated during the association’s seminar on Productivity and Enterprise Development last Thursday, July 28, 2022. “As a result, awareness and implementation of the concept are generally low in Ghana’s labour market,” he added.

The Labour Act 2003 (Act 651) requires that the principle of matching remuneration to productivity be included in Collective Agreements and also demands a duty on every worker to enhance productivity at work. These provisions imply that employers’ ability to comprehensively contain production costs, including the ability to adequately remunerate their workers, is hinged on the trends of productivity.

In pursuit of the above, Mr. Amuah said the GEA deemed the issue of productivity as very crucial in Ghana’s business competitiveness, viability, sustainability and improved incomes, and therefore, called for concerted efforts to sensitise and build the capacity of stakeholders on the need to prioritise productivity growth and develop tools to guide them match remuneration to productivity at the workplace.

The Director, Consultancy Directorate at the Management Development and Productivity Institute (MDPI), Dr. Theophilus Adomako, who gave a lecture on Productivity and Enterprise Development, further explained the importance of productivity to the Ghanaian economy, saying: “It’s key to maintaining competitiveness, at both organisation and country levels which ensures sustainable socio-economic development of citizens.”

To achieve that, he called for the need to implement the Labour Act, 2003 (Act 651) to the letter, which abundantly supports linking pay to productivity growth system through: Collective Bargaining and Agreements of business organisations; Design and implementation of productivity indicators measurement, analysis, reporting and learning mechanism; and Employers pay wages in line with productivity dynamics of the enterprise.

However, linking pay to productivity growth system is challenged in Ghana due to low awareness creation and sensitisation of the policy and regulatory framework, the weak institutional capacity of the regulator to carry out its functions for implementation of the policy, as well as a lack of awareness on the use and benefits of productivity indicators in policy and managerial decision-making, Dr. Amuah bemoaned.

He said growth in the minimum wage is generally higher than productivity growth rates in Ghana—except in 2009, where 22.06 percent in minimum wage growth rate compared with productivity growth rate of 17.78 percent.

“Ghana lacks the culture of productivity growth and continuous improvement mindset. Paper entrepreneurs have taken centre stage of economic management, destroyed everything including the mindset of the people and organisations,” he stated.

Way forward and opportunities

Dr. Amuah believes it is necessary to design a wage and salary system that is flexible, agile, and has the capacity to preserve business organisations’ competitiveness. Again, there’s need to adapt automatically to the dynamics of business organisations and enabling environment, he observed.

“Business organisations and nations that adopt flexible wage systems stand taller than those that do not,” he stated.

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