The Managing Director of the Bank of Africa, Kobby Andah says government should adopt a performance index pay approach towards public sector wages.
This approach he believes would ensure value for money in the payment of salaries for government workers.
Averagely government spends about forty percent of the country’s total revenue to pay public sector workers.
For years government has been spending close to 50% of its generated revenue for the year on payment of salaries of public sector workers.
In spite of the huge amounts spent on the payment of salaries, the public sector has been marred by low levels of productivity, arising from a growing mismatch between work demands and the skill set of employees.
Governments over the years have strived to sanitize and improve the level of productivity in the sector considering its importance to the growth and development of the country.
In 2019, government spent a little over GHS22 billion on employee compensation, the figure in 2020 jumped to GHS28 billion representing a 27% increase.
Total revenue for 2021 is projected to rise to GHS72.4 billion. A huge chunk of this figure will once again be used to pay public sector workers.
In an interview with Citi Business News, Managing Director of the Bank of Africa, Kobby Andah believes government can ensure value for money as well as improve public sector performance by applying a performance index pay approach.
“The situation where government spends a large percentage of the GDP on salaries is even worse than was thought of because it is known to be around forty percent but the special advisor to the Finance Minister through a presentation has displayed that it is worse. If you take out the earmarked funds and see what is left, he said about eighty percent goes into salaries. What it means is that we actually borrow to pay salaries, and it is not sustainable. There are structural problems and if we don’t do anything about it, they will be with us twenty years from now.”
He suggested that the performance index being used in modern organisations should be used for the public sector.
“The proposal is that just like most modern organisations that have a performance index pay — if you don’t deliver the results, you don’t get the pay– I think these kinds of reforms should come into the public sector.”