The Trades Union Congress (TUC) has offered its preliminary assessment of the 2021 National Budget by paying particular attention to the policies and programmes geared towards economic recovery, and growth as a means of creating jobs.
It notes that figures presented by the caretaker Finance Minister vividly illustrates the damage the pandemic has done to the macroeconomic framework.
However, it says the Budget is silent on the kind of aggressive employment-creation strategies expected in this crisis situation. TUC outlines factors hindering job creation as domestic enterprises remain subject to a trade policy regime that makes importing easier and more lucrative than production.
“GDP growth of less than one percent is the lowest since 1984. The 2020 budget deficit of 11.7 percent of GDP is the highest in several years. And for the first time since 2016, the primary balance registered a deficit of more than 5 percent of GDP”.
TUC also acknowledges that interest payments on the national debt will be the single largest expenditure item for government in 2021.
Owing to the employment effects of COVID-19 in all sectors of the economy, the TUC insists job creation must therefore be one of the main economic recovery strategies starting from 2021. In saying so, however, the TUC acknowledges the efforts government is making to preserve jobs and protect incomes in the public sector.
“We also recognize the US$750 million support to enterprises in the form of the Coronavirus Alleviation Programme – Business Support Scheme (CAP-BuSS). These are important initiatives”.
Also, despite a recent decline in interest rates, lending rates in the country remain among the highest in the world.
In Phase II of the Ghana-CARES programme, government intends to “embark on dedicated actions to support local enterprises in targeted sectors to enhance competitive import substitution and export expansion in light manufacturing”.
Consequently, the TUC says they are very interested in the details of those “dedicated actions” and the “targeted sectors”. It is therefore urging the Minister for Finance, who is also the Chairman of the Social Partnership Council, to table the details of this programme for discussion among the social partners.
The establishment of the National Unemployment Insurance Scheme (NUIS) and the training and retraining programmes in 2021 is in line with TUC’s call for a strong social protection system that offers assistance to people in times of crisis.
To this end, TUC has pledged to work with government and other social partners towards the establishment and smooth operations of the National Unemployment Insurance Scheme and the training and retraining programmes.
On the subject of the proposed tax measures to raise revenue, the TUC is of the view that given the massive loss of employment and incomes, a tax approach to recovery is economically risky.
“For example, a tax that pushes petroleum price up will reverberate through the economy and make life even more difficult for many Ghanaians”.
“However, we support the proposed 5 percent levy on the banking sector”. Considering the huge sums that have been poured into saving the banking sector, it makes economic sense for the banking industry to pay back, it added.
“Property tax can be another important source of government revenue if its collection can be properly coordinated by central government. It appears that the District/Municipal/Metropolitan Assemblies have neither the capacity nor the incentives to collect property taxes”.
The labour organization believes tax exemptions must be re-examined and those that have outlived their usefulness must be abolished. Also, there must be a comprehensive review of benchmark values used to calculate import tariffs, fees and levies at the ports.