3-week lockdown reduced wages of over 770,000 workers; caused 42,000 layoffs – GSS

The shock caused by the COVID-19 pandemic has had considerable impacts on Ghanaian businesses, forcing many firms to cut costs by reducing staff hours, cutting wages, and in some cases laying off workers, particularly within the 3-week partial lock-down aimed at curtailing the spread of the virus.

This is according to results from a new COVID-19 Business Tracker Survey conducted by the Ghana Statistical Service (GSS), in collaboration with the United Nations Development Programme (UNDP), and the World Bank.

In a statement issued by the Ghana Statistical Service, Government Statistician, Professor Samuel Kobina Annim said “Government has already put in place diverse supports for businesses including the establishment of a Coronavirus Alleviation Programme to protect jobs, livelihoods and support small businesses. And, also is the Government’s GH¢600 Million Stimulus Package to small and medium scale enterprises (SMEs). The findings of the Business Tracker provide specificity on the pathways of effects, variation in the effects for different categories of businesses, their geographical areas, and the extent of effects.”

The Business Tracker Survey showed that, about 770,000 workers (25.7% of the total workforce), had their wages reduced and about 42,000 employees were laid off during the country’s COVID-19 partial lock-down.

Also, the pandemic led to reduction in working hours for close to 700,000 workers.

The survey was carried out between May 26 and June 17, 2020 across the country to assess how the novel coronavirus has impacted private businesses. Some 4,311 firms were interviewed.

In addition, the data showed that during the lock-down, about 244,000 firms started adjusting their business models by relying more on digital solutions, such as mobile money and internet for sales. Firms within the agriculture sector and other industries used relatively more digital solutions (56%), with establishments in the accommodation and food sector being the least that adopted digital solutions (28%).

Economic Advisor for Ghana and The Gambia, Fredrick Mugisha, UNDP also said that, “If businesses, especially SMEs are provided with the needed support to adopt best practices, particularly in the use of digital solutions, this could go a long way to increase their productivity and resilience to future challenges”.

Generally, the results indicated that during the country’s COVID-19 partial lock-down, businesses received shocks in supply and demand for goods and services. Close to 131,000 businesses had challenges accessing finance and expressed uncertainty in business environment.

The average decrease in sales, according to the findings, was estimated at 115.2 million Ghana Cedis, with firms in the trade and manufacturing sectors (including exporting firms) largely affected. More than half of these firms had difficulties in sourcing inputs due to non-availability or increase in costs, leading to challenges in covering revenue shortfalls.

Even though the lock-down measures have been relaxed, the survey results show a high degree of uncertainty in the expectations of firms regarding sales and employment over the next 6 months.

World Bank Country Director for Ghana, Liberia, and Sierra Leone, Pierre Laporte  also stated that, “The survey shows that COVID-19 has had a deep impact on Ghana’s private sector, through several channels. Firms are experiencing lower demand for their products, difficulties in accessing finance and sourcing inputs, and face an extended period of uncertainty. The World Bank is working closely with the Government of Ghana to mitigate these negative impacts and assist businesses to survive the pandemic and build resilience in the face of the changed economic conditions.”

To lessen the impact of COVID-19, the survey results suggest the need for policies to support firms in the short and medium term. The most desired policies cited by the private sector include measures to improve liquidity such as subsidized interest rates, cash transfers and deferral of tax payments.

Many firms were not aware of the government’s support programs, suggesting the need for increased awareness and clarity on the guidelines and requirements of current interventions.

The results of the survey also suggest that efforts should be concentrated on re-establishing channels that were adversely affected during the pandemic. These should include re-establishing supply chains by providing credit guarantee schemes for those accessing finance, facilitating input procurement, and access to foreign markets to boost demand. The report also proposes support for firms with grants and business development services to upgrade technologies to increase productivity.

The Business Tracker Survey is part of a global Business Pulse Survey (BPS) initiative of the World Bank, surveying the impact of COVID-19 on the private sector in more than 40 countries.