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8 sectors of the economy for the production of goods and services to satisfy human wants. Favourable
8 institutional arrangementsfor wage workers in the labour market lead to high levels ofproductivity
^ which results in high economic growth hence high standards of living. Thispaper seeks to examine the
2 changes in the labour market for the period 1992 to 2016 that were occasioned by legislations during
tH the period. It further analysis the effectiveness of the enacted legislations in reducing disputes in the
^ labour market. The authors employed qualitative research strategy based on the use of both primary and secondary sourcesfor the study toprovide a historical narrative about links between labour supply and
® labour demand and how the linkage has been managed using statutes.
g Keywords: Labour Supply, Labour Demand, Labour Market, Productivity of Labour, Statutes,
I Economic Growth, Ghana
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www.hjournal.ru DOI: 10.17835/2078-5429.2020.11.3.066-079
THE LABOUR MARKET IN GHANA: CONTINUITY AND CHANGE IN THE FOURTH REPUBLIC (1992-2016)
MICHAEL NIMOH,
Kwame Nkrumah University of Science and Technology, (KNUST),
Kumasi, Ghana;
SAMUEL ADU-GYAMFI,
Kwame Nkrumah University of Science and Technology (KNUST),
Kumasi, Ghana, e-mail: [email protected]
The labour market in any economy links the labour supply by workers to the demand of labour by employers through the wage rate. Through this mechanism, wage workers are allocated to the various
Jel: J22, J23, J58, N37
и РЫНОК ТРУДА ГАНЫ: ИЗМЕНЕНИЯ В ЧЕТВЕРТОЙ | РЕСПУБЛИКЕ (1992-2016)
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О НИМО МАЙКЛ,
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(§ Университет науки и технологий Кваме Нкрума (KNUST),
^ Кумаси, Гана; о
tt АДУ-ГЬЯМФИ САМУЭЛЬ,
=э
0 Университет науки и технологий Кваме Нкрума (KNUST),
01 Кумаси, Гана, ;= e-mail: [email protected]
Рынок труда в любой экономике связывает предложение рабочей силы со стороны рабочих со спросом на рабочую силу со стороны работодателей через ставку заработной платы. Благодаря этому механизму наемные работники распределяются по различным секторам
о © Нимо М., Аду-Гьямфи С., 2020
экономики для производства товаров и услуг и удовлетворения человеческих потребностей. Благоприятные институциональные механизмы на рынке труда приводят к высокому уровню производительности, а следовательно к экономическому росту и высокому уровню жизни. В данной статье предпринята попытка изучить изменения на рынке труда за период с 1992 по 2016 год, вызванные изменением законодательства. Анализируется эффективность принятого законодательства в прекращении споров на рынке труда. Авторы использовали стратегию качественного исследования, чтобы представить историческое повествование о связях между предложением рабочей силы и спросом на рабочую силу и о том, как эта связь регулировалась с помощью законодательных актов.
Ключевые слова: предложение рабочей силы; спрос на рабочую силу; рынок труда; производительность труда; законодательные акты; экономический рост; Гана
I. Introduction
The global study of the labour market shows tremendous progress in the rewards and benefits that accrued to labour as well as the security on the job over time (Goldin, 1944, p. 3). The rule of law and the ability to bargain are the essential pre-conditions for the progress in the labour market as well as the economic growth of a country (Lucassen, 2013, p. 26). In examining industrial relations in Ghana from 1941 to 1971, Akilagpa Sawyerr stated that legislative regulation activities in the labour market began in the then Gold Coast ° with the Trade Unions Ordinance (Cap. 91) 1941 (Sawyerr, 1978). This industrial relations ° statute provided for the recognition of trade unions in the country and granted unions the оэ rights to bargain for conditions of service for their members. Subsequent legislations lead to the establishment of the Trade Union Congress (TUC). The TUC progressively became by law, the only representative of the labour movement in Ghana with the enactment of the Industrial Relations Act 1958 (No 56 of 1958) as amended in 1959 and 1960 (Cowan, 1960). Thus, on the supply side, a highly centralised union movement was established. ® It is imperative to mention that the move towards centralising the labour unions had to ^ be legislated because some household unions opposed it. For instance, individual "house | unions" such as the Railway Employees Union (REU) opposed the centralisation of the g union movement. Unions such as the REU enjoyed the support of their employers to remain § autonomous. These employers argued that a strong centralised labour movement would reduce their bargaining power in relation to their workers. This was because, on the demand
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side, the legislations as established did not seek to establish a centralised employers' union o
movement. <
The first individual trade unions that existed in the country were those of the public ^
servants and railway and harbour workers. This was partly because colonial officers worked in the public sector (Jeffries, 1973). Also, prior to the implementation of the neo-liberal economic o
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reforms as part of the structural adjustment programme of the 1980s, the public sector was a major source of employment for the majority of labour market entrants (Otoo, Osei-Boateng, Asafu-Adjave, 2009, p. 1). As a result, public servants have been the major beneficiaries q from legislations in the labour market (Linden, 2008). Through the efforts of these unions ^ and employers most especially the government, several legislations were enacted to regulate 3 activities in the labour market. Some of the major industrial relations legislation enactment w repealed by 1992 included the Trade Unions (Amendment) Ordinance, 1953 (No. 19), the o Trade Unions (Amendment) Decree, 1966 (NLCD 110), the Trade Disputes (Arbitration and ^ Inquiry) (Cap 93), the Industrial Relations Act, 1965 (Act 299), the Industrial Relations Act, 1965 (Amendment) Decree, 1967 (NLCD189), the Industrial Relations (Amendment) Decree, 1972 (NRCD 22), the Labour (Amendment) Decree, 1967 (NLCD 212), the Labour (Amendment) Decree, 1969 (NLCD 331), the Labour (Amendment) Decree, 1969 (NLCD 342), the Labour (Amendment) Decree, 1973 (NLCD 368), the Labour (Amendment) Decree, 1976 (NLCD 150) and the Labour (Amendment) Decree, 1976 (NLCD 212).
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In assessing the effectiveness of the legislations stated above, Sawyerr concluded that, labour market legislations, especially those enacted before Ghana gained independence, apart from giving recognition to local unions rights were ineffective in its attempt to legislate political unionism out of existence (Sawyerr, 1978, p. 334). He stated that, the attempt to legislate the trade unions out of political participation was doomed to fail because of the existence of a general anti-colonial political activism during the period. He further noted that, the Industrial Relations Acts from 1958 to 1971 while effective in achieving the check-off system of payment of union dues were not very effective in achieving the set aim with regards to the legislation for a centralised TUC as against voluntary amalgamations of individual unions. This was because the TUC leadership before 1958 was not powerful enough to overcome the pressures by the strong house unions that argued for voluntarism in trade unionism (Sawyerr, 1978, p. 334). The United African Company (UAC) Employees Union and the Railways Workers Union (RWU) of Sekondi-Takoradi were those determined to retain their independence from the TUC (Jeffries, 1973).
Writing about the evolution of the Ghana TUC, Richard Jeffries stated that, the Industrial Relations Act 1958 and the 1959 and 1960 Amendments were to enforce the "New Structure" of the TUC (Jeffries, 1973, p. 282). He stated that, the process of centralisation of the unions was patterned on the general principle of centralisation of political and economic 8 power by the CPP administration. The legislations enacted during the period focused cm on changing the structures in industrial relations and those legislations were backed by ^ credible sanction which helped to make them effective in achieving some of the set aims (Jeffries, 1973, p. 282). To make the legislation effective, the 1958-1960 legislation outlawed th the non-TUC unions and union shop and brought all workers formally within the TUC. The
0 check-off system instituted also gave the financial muscle with which the TUC consolidated its position. Therefore, despite the opposition to the compulsory centralisation of Ghana TUC by some house unions and employers, the 1958-1960 Industrial Relations Act achieved
1 that set objective.
1 Those who opposed such compulsory unionism worked to change the status quo when
g in 1965 a new legislation was enacted removing the legal basis for the centrality of the m TUC. However, the 1965 Act lacked credible sanctions to remove TUC/CPP control over
5 unions. Thus, governments' intervention often reinforced existing trends (Goldin, 1944). g The governments' intervention in the labour market has increased in importance over
6 the years. During the fourth republic of Ghana, there have been legislations such as the ^ National Pensions Act, 2008 (Act 766) which established the National Pensions Regulatory ^ Authority (NPRA) with a vision to ensure workers retirement income security. Also,
the National Tripartite Committee (NTC) was established by the Labour law, 2003 (Act 651) to amend and consolidate the laws relating to labour, employers, trade unions and
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o individual relations. Act 651 also established the National Labour Commission (NLC), for "" the settlement of labour disputes and the provision of a legal framework for the regulation of o employer-employee relationship. These policies impact on working conditions, employment § by sector, income distribution and unemployment in the country. According to Sawyerr, labour market legislations that do not accord with tendencies in the economic and social infrastructure of society are unlikely to be effective. Also, where legislation does so concur with the economic and social infrastructure and is also backed by adequate institutional o changes, it is likely not only to be effective, but also, in its turn, to contribute to the o fashioning of those tendencies (Goldin, 1944, p. 345). This paper examines legislation in the w labour market for the period 1992 to 2016 by analysing the major interest groups for those o legislations, the credible sanctions inherent in the legislations to make them effective and < the labour market changes occasioned by the legislations. This paper revolves around one gc critical question; what changes in the labour market were occasioned by the legislations to o make their implementation effective?
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The section II of the paper shows the research method adopted for the study. Section III focuses on discussions under the sub-themes; Labour Law 2003 (Act 651) and other labour market legislations; Wages and salaries and Employment. Section IV provides the conclusion.
II. Methodology
To reveal the complex and perhaps multilayered nature of legislating the labour market as well as the processes and the relationships in the market, a qualitative research approach was adopted for the study. A systematic content analysis of the Labour Law 2003, Act, 651, sampled newspaper articles and official documents relating to the labour market from 1992 to 2016 were also analysed.
Themes outlined in the study were investigated using data from a sample of the rank and file trade unionists as well as executive members of the various unions affiliated to TUC. Sampled executive members of the Ghana Employers' Association (GEA), the Association of Ghana Industries (AGI) and government officials from the Labour Department, National Labour Commission (NLC), the National Tripartite Committee (NTC) under the Ministry of Employment and Labour Relations were also interviewed. These are the social partners in labour relations. Using purposive sampling technique, 30 respondents were sampled for the study the participants each from labour unions, employers' associations and the government. g In the workplace, we interviewed both chief executives and employees. The interviews were
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conducted in quiet places at the work environment or offices of interviewees where they were unlikely to be interrupted. Interviews were conducted between June and August 2019.
Data was gathered from conversations and interviews and from official records and documents. For the interviews, approximately two weeks before a visit, we called the participants we wished to confer and requested and interview that would last 30 minutes at most. We asked the prospective interviewees for an indication of time slots when the interview might be scheduled. A sample of the interview guide was emailed to participants to enable them gather in advance the relevant information. The interview guide contained questions that required respondents to provide information on legislations in the labour market between 1992 and 2016 and the events leading to the enactment of those legislations. m They were also required to provide an assessment of the effectives of the legislations enacted during the period. We informed interviewees in advance that if they had no objections, we would have an oral recording of the interview in order to conserve time and lessen the distraction of handwritten notes. Two days before the scheduled time for the interview, we called to remind the participants about the schedule. We arrived promptly for each face- ^ to-face interview. Respondents were once again briefed about the purpose of the study, the task demands and participants rights explained orally at the beginning of the section.
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Respondents were guaranteed confidentiality of their responses. In 14 days, we interviewed o
30 respondents and had all the data on tape. Handwritten notes were also taking during ^
the interview. The substance of the interview was later transcribed from the tape. It took o
25 to 30 minutes for participants to finish answering the questions. We wrapped up each §
interview by thanking the interviewee for the courtesy of their time. We offered to provide a
copy of the research paper to the participants once the study was completed.
Official records and documents were another source of information for the study. We
went to the Department of Labour, the Head office of the TUC, the Ministry of Employment o
and Labour Relations, which kept the official records. We examined files to learn about the o
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developments leading to the enactment of legislations in the labour market along with files w
which showed the stakeholders assessments of the effectiveness of the enacted legislations. o
We took our laptops and handheld scanners to take notes. We also collected samples of <
published documents where possible. In this regard, data was collected from Labour Market Q^
Observatories which include the Ghana Statistical Service (GSS), the Ghana Living Standard °
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Survey (GLSS), the Ministry of Interior (MoI), the International Organisation of Migration (IOM) and the International Labour Organisation (ILO). Using the constant comparative method of analysis, the primary and secondary data collected were analysed to evaluate the emerging themes that guided the development of the study.
III. Discussions
The Labour Act 2003, Act 651 and other labour market legislations. An initiative to develop a new Labour Act to repeal all existing industrial relations acts and decrees began under the National Democratic Congress (NDC) government in May, 1999. All the social partners in the labour market, that is, government, employers and organised labour were involved in this process of drafting a new Labour Act. The new Act, the Labour Act (Act 651) was passed in 2003 by the New Patriotic Party (NPP) government. This Act was aimed at promoting fairness, equity and mutual trust among market players and to ensure industrial harmony.
The Labour Act 651 (2003) provides for the establishment of public employment centres and private employment agencies, protection of employment, general conditions of employment, employment of persons with disability, employment of women, employment of young persons, fair and unfair termination of employment, protection of remuneration, 8 special provisions relating to temporary workers and casual workers, trade unions and CM employers' organisations, collective agreement, a National Tripartite Committee (NTC), ^ protection against forced labour, occupational health, safety and environment measures, labour inspection, unfair labour practices, a National Labour Commission (NLC) and th regulations on strikes. It promotes trade union or employers' organisation pluralism as it
0 permits two or more workers employed in the same undertaking to form trade union or two or more employers in the same industry or trade each of whom employing not less than
® fifteen workers to form or join employers' organisation1. Individuals could voluntarily decide
1 to join the TUC or otherwise.
1 Unlike the Industrial Relations Act that existed prior to this New Labour Act, Act 651,
g the ministerial control of trade union activities is greatly reduced by the Act 651, except rn that, the Minister of Employment and Labour Relations chairs the NTC which is made S up of five members each from government, labour unions and employers' associations. Also, the chairperson and other members of the NLC are also appointed by the President acting in consultation with the Council of State. The NLC is made of six representatives, ^ two each nominated by the Government, organised labour and employers' associations. ^ The State therefore continues to exercise a considerable control in the labour market. This
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partly because the government continues to employ a sizeable number of the labour forces especially the formal sector workers.
and mediation. However, the NLC chaired by the Minister of Employment and Labour
o Relations can make application to the High Court for an order to compel a disputing party to
§ comply with their directive or order to end a strike action and return to work. This provision
^ in the Act, gives room for the use of force in ending a strike or directing workers to return to
cc work without properly concluding the negotiation and mediation processes. For instance, in
^ October, 2006, striking members of the Ghana National Association of Graduate Teachers
o (NAGRAT) were ordered by an Accra Fast Track Court to call-off its eight weeks strike and
o return to the classroom2. This followed an application filed by the NLC under section 172 of
w Act 651 of the Labour Law, praying the court to order members of NAGRAT to call-off their
o strike action. In an interview with Christian Addai Poku, the then NAGRAT president, the
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gg 1 Ghana Labour Act, 2003 (Act 651). Retrieved from: http://www.melr.gov.gh/wp-content/uploads/2015/11/LABOUR-ACT-2003.pdf
g 2 GNA, 31st October, 2006. Retrieved from: https://www.graphic.com.gh/news/general-news/court-orders-nagrat-to-call-off-their-
—, strikegen.html.
use of force by the NLC through the High Court's had a negative effect of breading a further mistrust between the union and the government3. He also stated that the action of the NLC negatively affected the productivity of teachers since the main issues that warranted their strike action was not resolved.
Again, Act 651 reinforces the check-off payment system for trade union dues. It provides that a trade union may issue to the employer of any worker who is a member of that trade union a request to the employer to deduct from wages of his or her workers concerned, a sum specified by the trade union. This provision does not seek the consent of the workers involved even though workers are allowed to latter withdraw their membership of a union if they so wished. Again it must be mentioned that, this Act 65 provision was contrary to the Public Service Negotiation Law, PNDC 309, 1992, which allowed the deductions of union dues only if the Registrar of Trade Unions was satisfied of the written consent of all workers concerned. The new provision in Act 651, has been brewing discontent among the rank and file of some union members. Speaking to a member of the Ghana National Association of Teachers (GNAT), he stated that the check-of system doesn't make leadership of their association very much accountable to the union members4. To him, since funds will be automatically deducted and given to the leadership, the leaders have not being working hard to earn the support of members in negotiating for better conditions of service.
Another key feature of Act 651 concerns the hours of work. The Act provides that the g hours of work of a worker shall be a maximum of eight hours a day or forty hours a week
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3 Interview with Christian Addai Poku, NAGRAT President, 25th July, 2019, Kumasi.
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5 GSS, Ghana Living Standards Survey Report of the Fifth Round (Hereinafter: GLSS 5, 2008). p. 40. Retrieved from: http://www2.
except in cases expressly provided for in the Act. Where a worker in an undertaking works after the hours of work specified in the Act, the additional hours done was to be regarded as overtime and paid for at an established fixed overtime rate. According to the Ghana Statistical Service (GSS), about 51.9% of people who were employed in 2005/2006 spent less than 40 hours per week on their main job while the remaining 48.1% spent more than 40 hours per week on work5. Thus, more than half the working population in 2005/2006 worked the legislated maximum 40 hours of work a week. In 2012/2013, 43% spend 40 hours or less in their main job while 32.4% of the employed population spent more than 40 hours in their main job6. Thus, from 2005/2006 to 2012/2013, the number of people employed in their main jobs working more than the legislated maximum hours of work per week reduced from 48.1% m to 32.4% respectively. From the above discussions it can be concluded that within the formal and informal sectors of the economy, a greater number of employers spend 40 hours or less in their main job. This may partly explained to be focusing on the legislation. However, the reason why a greater percentage of the economically active persons work 40 hours or less may be linked to unemployment in the country. Persons who are unemployed engage in some activities just to survive by working fewer hours per week just to earn some income7.
Assessing the hours of work per week by sectors of the economy, the 2005/2006 GSS
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data showed that within the primary sector, 64.5% of agricultural workers and 50.4% of o fishermen worked for less than 40 hours per week8. The secondary sector exhibits higher ^ proportion of workers working more than the legislated maximum hours per work per week. o For instance, 85% of workers whose main occupation was in the electricity sector worked § for more than 40 hours per week. Again, within the services sector, the educational sector workers had a high percentage of workers working for less than 40 hours per week. 56.2% of workers who main occupation was in education worked for less than 40 hours per week, followed by 39.9% of workers in the hotel and restaurants category and 34.2% for those in
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Interview with Edward Obeng, GNAT member, 10th August, Kumasi. LU
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statsghana.gov.gh. _l
6 GSS, Ghana Living Standards Survey Round 6 (Hereinafter: GLSS 6, 2014), p. 18. Retrieved from: https://statsghana.gov.gh/ gssmain/fileUpload/Livmg%20conditions/GLSS6_Mam%20Report.pdf C£
7 GLSS 6, 2014, p. 29. ^
8 GLSS 5, 2008, p. 40. ^
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trading activity. The financial services had 97.9% workers working for more than 40 hours per week9. Also, about 37% of workers engaged in agriculture, forestry and fishing and 60.4% of workers engaged in transportation and storage worked between 25 and 44 hours per week between 2012/201310. Consistent with the 2005/2006 figures, those in the educational sector worked a minimum of 36.9% between 25 and 44 hours per week in 2012/2013.
Act 651 also provides that, a worker employed for a period of six months or more within a year shall be secured by a written contract of employment. According to Otoo, et al., 55% of the working population who were employed in 2005/2006 had not signed any written contract of employment (Otoo, Osei-Boateng, Asafu-Adjave, 2009, p. 41). Also, 57.3% of employees in both public and private organisations in 2005/2006 did not have any formal contract of employment with their employers before starting work11. This has been a major cause of labour unrest in Ghana under the 4th Republic. For instance, the Ghana Medical Association (GMA) went on strike from 30th July to 24th August, 2015 over the absence of codified conditions of service12.
The right to form or join a trade union is central to the exercise of worker's rights and freedoms (Baah, Achakoma, Ampratwum, 2009). The Labour Act 651, 2003 as noted above, grants workers the right to join or form trade union. Organised workers often define their common interest in class terms and use their strength in numbers to agitate for better conditions of work. There is a strong and positive relationship between unionisation and access to workplace benefits and training (Otoo, Osei-Boateng, Asafu-Adjave, 2009, p. 48). A study conducted by Otoo, et al., indicates that, despite the legal guarantees for the formation and participation in trade union activities, just like the above mentioned legal provisions, 50% of formal sector workers were working in unionised enterprises in 1998/99, compared to about 38% in 2005/06 (Baah, Achakoma, Ampratwum, 2009). Thus, despite the growth in the labour force in Ghana, the proportion of the employed in unionised work continues to decline. This is indeed a worrying trend in the labour market, in that, workers struggled in the 1940s to be allowed to form and join labour unions only for them to withdraw their membership after the legal guarantees for unionisation.
Act 651, 2003, also established the NLC to receive and address workers complaints and to encourage dialogue in the labour market in Ghana. The commission provides important statistics that aids decision making in the labour market. The table below shows type of workers complaint/petitions received by regions for the period 2014 to 2016. From the table, the number of complaints on Summary Dismissal increased from 122 complaints in 2014 to 189 complaints in 2016. Similarly, complaints on unfair termination of appointments increased from 158 in 2014 to 215 in 2016. Complaints on unpaid salaries also increased from 38 in 2014 to 96 in 2016. The only variable that has seen some decline in the number of compliant is that on retirement and end of service benefits. It declined from 33 in 2014 to 13 in 2016. These are the indices, if not addressed lead to strike actions in the country. However, the fact that there is a provision within the law for workers report these issues provides the platform for dialogue and has been quite effective in helping to resolve potential strike actions.
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Table 1
Types of Complaints/Petitions received by Region
Sector Summary Dismissal Unfair Termination Retirement/ESBs Unpaid Salaries
2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016
Accra 116 141 180 151 212 221 33 9 13 34 49 93
Western 6 7 9 7 5 5 0 0 0 4 4 3
Total 122 148 189 158 217 215 33 9 13 38 53 96
Source: 2016 Statistical Report, Ministry of Employment and Labour Relations. Note: The NLC only has offices in the Greater Accra and Western Region.
9 GLSS 5, 2008, p. 21.
10 GLSS 6, 2014, p. 29.
11 GLSS 5, 2008, p. 41.
12 Myjoyonline. 21st August, 2015. GMA-Calls-off Strike. Retrieved from https://www.myjoyonline.com/news/gma-calls-off-strike/.
In conclusion, this section has dealt with the Labour Act, 2003, Act 651 by examining the provisions in it. There are adequate provisions in the Act to ensure a fair playing field for all the stakeholders in the labour market. It mandates the Minister of Employment and Labour Relations who is chairs the NTC as well as the chair of the NLC to report unresolved labour disputes to the courts for a settlement. As a result, these bodies have had to look into the law to make their cases against striking workers for a determination thereby reducing the powers of the Minister who could hitherto use state power to order striking workers back to work. Thus, although stakeholders in the market have a preference for using negotiations and mediation to resolve disputes, the courts do provide an environment for parties to argue their case.
Our analysis has also shown that the number of economically active persons working 40 hours or less per week has been increasing. This trend has the potential of increasing the productivity of labour by reducing the thread on the physical and mental health on workers resulting from long hours of work. Act, 651 establishes rules and undertakings relating to hours of work different from the eight hours day maximum working hours. The provisions of sanctions within the law has helped in effecting the need change the section of the Act wanted to achieve. The authors do acknowledge that unemployment could also help explain why the numbers of people working 40 hours or less per week have been increasing.
Wages and salaries
Wages and salaries are of fundamental importance to workers. Mr. Kwasi Adu Amankwah, a former Secretary-General of the Ghana Trades Union Congress (TUC), in 2006 remarked that, «For a worker, there is little of more fundamental importance than whether remuneration levels are sufficient to supply the family with a reasonable and fair standard of living»13. The wages of workers, whether absolute or relative is the baseline for an assessment of the effectiveness of labour market regulations. Labour unions use industrial actions to pressurise their employers to improve their conditions of service most especially their wages and salaries (Panford, 1994, p. 3). For instance, members of NAGRAT embarked on strike from 1st September to 30th October, 2006 to demand for improvement in their conditions of service. Through the use of industrial strike actions, the government expedited its work on the Single Spine Salary Structure (SSSS) in 2007 through the Fair Wages and Salaries Commission (FWSC).
The Fair Wages and Salaries Act, 2007, Act 737 was adopted in 2007 as part of the public sector reforms. The policy was adopted to ensure fair, transparent and systematic implementation of the government pay policy. One of the major policies implemented by the ^ FWSC in 2010 was the SSSS. The SSSS policy increased the duality in the labour market with a persistent and widening pay gap between the public sector and the wages earned in other
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sectors of the economy especially the informal sector. Public sector workers have a distinct o
advantage over those who are self-employed in Ghana (Kingdon, Sandetor, Teal, 2006, p. ^
406). Geeta Kingdon et al showed that in 1998/99 the differential for wage employment over o
self-employment in urban Ghana was 17% while the public sector wage differentials was § over 50% (Kingdon, Sandetor, Teal, 2006, p. 406). Wages and Salaries differ among workers because of skills differentials between workers employed in each sector and the bargaining power of the unions that exist within each sector (Kingdon, Sandetor, Teal, 2006, p. 405).
It must be noted that in 1959, Ghana, ratified the Minimum Wage-Fixing Machinery o
Convention to help improve the wages and salaries of workers in the country (Aryeetey, o
Baah-Boateng, 2016, p. 13). Since then, the country has been fixing a minimum wage and w
encouraging employers to implement it. As per the Convention, no worker is to be paid a o
wage less than the mandatory minimum wage but a significant proportion of the workforce <
earn below the minimum wage (Otoo, Osei-Boateng, Asafu-Adjave, 2009, p. 36). The Q?
13 Ghanaian-Worker, no. 30, 2006, p. 8. °
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minimum wage rate is determined annually by the NTC and it is used as a benchmark for wage negotiations in the country (Nimoh, 2015, p. 70). Governments over the years have consistently increased the minimum wage rate for workers. For instance, from 1992 to 2000, the minimum wage was increased by 814% from GH^1.24 to GH^ 14.8514. Also, from the year 2001 to 2008, the minimum wage was increased by 309% from GH^14.85 to GH^60.751B. The minimum wage was GH^83.97 in 2010, GH^100.71 in 2011, GH^120.96 in 2012, GH^141.48 in 2013, GH^162.00 in 2014, GH^189 in 2015 and GH^216 in 201616. The minimum wage is inculcated into the calculation of the basic pay for workers. The increase in the minimum wage therefore improves the wage rate of workers.
The minimum wage and other regulations mentioned above are by definition applicable to the formal sector than the informal sector (Kingdon, Sandetor, Teal, 2006, p. 406). Businesses in the formal sector pay workers higher than the minimum wage. For instance, in December, 2000, the minimum wage was GH^4,200 per month, private sector wage was ^524,603 per month and public sector wage was ^333,924 per month17. Again, in December, 2004, the minimum wage was ^11,200 per month, private sector wage was ^1,429,807 per month and public sector wage was ^1,122,653 per month18. Similarly, in December, 2006, the minimum wage was ^16,000 per month, the private sector wage was ^1,873,183 per month, and the public sector wage was ^1,256,664 per month19. Yet it must be noted that, data from 8 the GLSS V shows that, 8% public sector workers and 10% of private formal sector workers CM were earning below the national minimum wage20.
^ The general level of wages and income in the labour market is low (Baah, Otoo, 2006).
Otoo et al, have also established that, in relative terms, wages in Ghana are low when ■h compared to wages in other countries in the West African sub-region that are at comparable o levels of social and economic development (Otoo, Osei-Boateng, Asafu-Adjave, 2009, p. 31).
As noted above, the regulations enacted to improve the income levels of workers in the ® country are by definition applicable in the formal sector of the economy. However, for the g share of the formal sector in total employment has been declining significantly since the s implementation of the neo-liberal economic reforms of the 1980s.
g In summary, the modern labour market is characterised by existence of a wage structure
m which is upward sloping, and payments of benefits and pensions (Goldin, 1944, p. 28). Unions
5 are an important part in the wage setting processes (Kingdon, Sandetor, Teal, 2006, p. 403). ro Thus, the evolution in the labour market can be explained by focusing on the strong unions
6 formed by the workers which enable then to gain considerable power to push for legislations ^ to enhance their welfare21. Employers often had to give in to strong union workers benefits ^ as a defensive strategy (Sandord, 1985). The minimum wage legislation as well as the SSSS
policy has significantly improved salaries of workers in the formal sector but the average wage earning for the economically active people is still low in relative and in absolute terms.
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Employment
According to Alagidede, et al., countries with high level of informal activity tend to have low unemployment figures because those who find themselves without work have to involve themselves in some activities to utilise their skills to survive (Alagidede, Baah-Boateng, Nketiah-Amponsah, 2013, p. 20). Within the formal sector, as a result of the high percentage
14 Ministry of Employment and Labour Relations, 2016 Statistical Report, p. 51 www.melr.gov.gh/2016-statistical-report (Accessed O 16 July, 2018). Z 15 Ibid. g 16 Ibid.
LU 17 Bank of Ghana, Issues on Wages and Labour Market Competitiveness in Ghana, July, 2007 p. 17 www.bog.gov.gh/issues-on-
q wages-2.pdf (Accessed 31 May, 2018); the cedis currency unit used is the currency that was in circulation for the period. The wage
_l rates provided can be redenominated into the new GH0 by a division of 10,000.
< 18 Ibid, p. 17.
19 Ibid, p. 17.
3 20 GLSS 5, 2008, p. 29. O
—, 21 Interview Nana Akuoko, member Ghana Registered Nursing Association, 8th August, 2019, Kumasi.
of government recurrent expenditure spend on wages and salaries of public sector works, the government continues to pursue policies aimed at reducing public expenditure wages and salaries. This has been done in part by restricting public sector employment, often as a consequence of the conditions imposed on borrowing governments by IMF (Panford, 2001). The table below provides data on total levels of employment in Ghana classified under economic and institutional sectors. The total level of employment rose by 25 per cent from 5.77 million in 1992 to 7.22 million in 1999. Between the years 2000 and 2006, it rose by 23 per cent from 7.43 million to 9.14 million. There was also a 17.5 per cent increase in the level of employment between 2010 and 2013, an increase from 10.24 million to 12.03 million. From the data, there has been continues growth in the levels of employment in Ghana since the return to constitutional rule in 1992 even thou the levels of employment are increasing at decreasing rate. Higher levels of employment enhance the standard of living of the population by reducing the level of dependency in the country. It also provides capacity to the labour unions in terms collective bargaining negotiations on the labour front.
Table 2
Quantity of employment
Economic sector 1992 1999 2000 2006 2010 2013
Total employment (millions) 5.77 7.22 7.43 9.14 10.24 12.03
Economic sector
Agriculture 62.2 55.0 53.1 54.9 41.9 44.7
Industry 18.2 25.7 26.2 25.6 26.1 23.7
Services 27.8 31.0 31.5 30.6 43.0 40.9
Institutional sector
Public 8.4 6.2 7.2 5.7 6.4 5.9
Private 6.1 7.5 8.9 7.0 7.4 6.1
Informal 85.5 86.1 83.9 87.3 86.2 88.0
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Source: Ghana Living Standards Survey (GLSS) 3, 4, 5 and 6; Population Census 2000 and 2010.
From the table 2, the agricultural sector remains the major source of employment in Ghana despite the gradual decline in its share of total employment. From 1992 to 2013, the agricultural sector's share of the total employment in Ghana declined by 28 per cent. The services sector increased its share of total employment by 47 per cent between 1992 and 2013 while the industrial sector increased by 30.2 per cent within the same period. This shows a development towards services led total employment in Ghana, to be followed by industry and finally agriculture. Thus, there have been significant economic sectorial changes in the labour market over the period under review. The shift in employment from agriculture to services and from public sector to the informal sector impacts on earnings in the labour market and marks a departure from what existed in the past.
As noted above, the informal sector continues to employ a greater proportion of the total number of people employed in Ghana. The informal sector employment refers to the labour force of firms not registered with the government (Palmade, Anayiotis, 2005, p. 1). According to Kwame A. Ninsin, the informal sector refers to the array of precarious economic activities which have become the haven for people seeking desperately to make a living because they are unable to secure wage or salaried employment in the formal capitalist sector (Ninsin, 1991, p. 2). From the table above, there has been persistent and appreciable increase in the percentage of informal sector employment from 85.5 per cent in the year 1992 to 88.0 per cent in the year 2013 except for the year 2000 when its share of total employment dropped to 83.9 per cent. Thus, there is faster employment growth in the informal sector, that is, 2.5 per cent from 1992 to 2013 as compared to an equal percentage decline in formal
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sector employment. As Schneider and Ente state, «the informal sector is a reality of the world, exists everywhere and gets larger every day» (Schneider, Enste, 2000, p. 77). In an interview with Nana Poku, a self-employed quick money lender who operates his business without a licence, his decision not to register his business with the government was because of the complexity of the tax system in the country22. Thus, apart from the inability of a sizable number of the labour force to find jobs in the formal sector, private or public, some people in the labour force are moving into the informal sector due to the complex system of taxes in the country. This is a trend that policy makers must take a critical look at.
It must be stated, however, that, the informal sector is credited with providing jobs for people who would otherwise be unemployed in the country. This notwithstanding, the persistent increases in the numbers are a worrying trend as it tends to erode government tax revenues. It does create unhealthy relationship among stakeholders in the labour market because formal sector firms deem themselves unprotected against unfair trade conditions in the informal sector.
Beginning from the time of independence from the British in 1957, millions of workers in Ghana experienced formal sector employment in the country's large public sector. From the table above, public sector employment exceeded private sector employ by 2.3 8 per cent in the year 1992. However, from the year 1999, private sector employments have cm exceeded employment in the public sector. This was perhaps due to the implementation ^ of various International Monetary Fund (IMF) and World Bank Structural Adjustment Programmes since 1983 aimed at downsizing public sector employment in the country. th By the year 2013, public sector employment was 5.9 per cent of total employment as o compared to a higher quantity of 6.1 per cent for the private sector. Thus, in terms of employment ratios in the labour market in Ghana, the private sector employs a greater proportion of the total number of people employed in the country. These changes may g be linked to forces of globalisation and the application of information communication technologies. Thus, the labour market is largely informal with a high number of private sector employees.
Furthermore, there have been significant changes in the number of people who are taking second-jobs in the labour market. A second-job is any task or activity that the employed performs continually or at a certain point in time in addition to their main employment. It is also known as moonlighting. Workers take on a second job in order to tackle "working poverty" to improve or maintain their living standard23. Baah Boateng et al., (2003) noted that moonlighting is a reflection of the changing market outcomes in Ghana (Baah, Adjei, Oduro, 2013). Available statistics from the GSS shows that, 5.3% of people employed in 2015 had second-jobs24. The practice is more prevalent in the rural centres than in urban centres.
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o The 2015 statistics showed that 4.3 per cent of people employed were having second-jobs in "" urban centres as compared to 6.4 per cent in rural centres25. The second-jobs were mostly not o within the same industry.
<5 Another area where changes occurred was on the relationship between economic growth
and unemployment in Ghana. This was essential to assess the impact of the unemployment rate on GDP growth and advance reasons for the relationship that exist between the variables. Principles of economics postulate that rising unemployment is associated with o cyclical economic crises, all other things being equal. Unemployment rate has a negative o relationship with GDP (Azmi, 2013). The table 3 relate to data on economic growth and lu unemployment levels in Ghana. o
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22 Interview with Nana Poku, an unregistered quick money lender, 14th July, 2019 at Kwadaso, Kumasi. CC 23 Statistical Report 2015: Ministry of Employment and Labour Relations. Retrieved from: http://www.melr.gov.gh.
24 Labour Force Report, (2015), Ghana Statistical Service.
25 Labour Force Report, (2015), Ghana Statistical Service, p. 16.
Table 3
Data on GDP growth rate and Unemployment rate in Ghana, 1992-2016
Indicator 1992 1996 2000 2004 2008 2012 2016
GDP growth rate (annual %) 3.9 4.6. 3.70 5.60 9.10 9.30 4.60
GDP growth rate (annual %) Non-Oil 8.70 3.40
Unemployment, total (% of total labour force) 4.70 8.50 10.40 5.30 5.60 4.10 5.50
Source: Data on GDP growth rate was computed from Bank of Ghana economic data on real sector economy (www. bog.gov.gh/economic data/real sector). Data on unemployment was retrieved from International Labour Organisation, ILOSTAT database.
From the table 3, from 1992 to 1996, the GDP growth rate increased from 3.90 per cent to 4.60 per cent respectively while the unemployment rate increased from 4.70 per cent to 8.50 per cent respectively. This shows a positive relationship between GDP growth rate and unemployment rate, that is, an increase in economic growth leading to an increase in unemployment rate. Thus, between 1992 and 1996, Ghana's GDP growth rate did not impact on positively on employment creation for the country's labour force. The GDP growth rate between 1992 and 1996 was therefore not led by employment of more human labour. Thus, increasing economic GDP growth rate did not lead to improved labour market conditions. Also, from the year 1996 to 2000, the second term of the NDC government under J. J. Rawlings, the GDP growth rate decreased from 4.60 per cent in the year 1996 to 3.70 per cent in the year 2000. This resulted in an increase in the unemployment rate from 8.40 per cent in the year 1996 to 10.40 per cent in the year 2000. Thus, between 1996 and 2000, the unemployment rate worsened as a result of the decrease in the GDP growth rate in the country.
Under the leadership of John Agyekum Kuffour, the GDP growth rate increased from 3.70 per cent in the year 2000 to 5.60 per cent in the year 2004 and 9.10 per cent in the year 2008. The unemployment rate initially, decreased from 10.40 per cent in the year 2000 to 5.30 per cent in the year 2004 and thereafter increased slightly from 5.30 per cent in the year 2004 to 5.60 per cent in the year 2008. Thus, between 2004 and 2008, while the GDP growth rate increased, the unemployment rate also increased. This again shows that for the Ghanaian economy, increases in the GDP growth rate may not be attributed to increased employment of the labour force.
Finally, under the leadership of John Evans Atta Mills and John Dramani Mahama, from 2008 to 2016, the GDP growth rate increased from 9.10 per cent in the year 2008 to 9.30 in in the year 2012 while the unemployment rate decreased from 5.60 per cent in the year 2008 to 4.10 per cent in the year 2012. There is an inverse relationship between the GDP growth rate and the unemployment rate. Thus, an increase in employment of the labour force as output of all final goods and services also increase. However, from the year 2012 to 2016, the GDP growth rate decreased significantly from 9.30 per cent to 4.60 per cent resulting in an increase in the unemployment rate from 4.10 per cent to 5.50 per cent26.
It can be concluded that, during the period for this study, the relationship between the GDP growth rate and the unemployment rate has been fluctuating showing both positive and negative relationship over the period. Thus the rising unemployment rate may not be due to increases or decreases in GDP growth rate by to other factors like technological advanced capitalism. Also, there is a high level of informality of employment in the country. This high degree of informality of employment creates a difficulty in an attempt to assess the effectiveness of the labour market legislations since the informal sector tends to be unregulated.
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26 GLSS 5, 2008.
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IV. Conclusion
This paper has provided an examination of the changes in the labour market for the period 1992 to 2016 by assessing legislations enacted during the period. It further sought to analyse the effectiveness of the enacted legislations in harmonising relations between the stakeholders in the labour market.
The Labour Law, Act 651 (2003) provides a more voluntary control in the industrial environment by emphasising factory labour unions and factory employer associations' negotiations and mediation. However, stakeholders in the labour market have had to resort to the use of court system to resolve some major disputes. There is the need for employers to give room for workers or their representatives to participate in major decision making processes at the work place to reduce the many disputes in the labour market in the country.
Also, the informal sectors' share of the total employment has increased significantly over the years. However, employment in the informal sector of the economy is more unstable, casual and insecure. Thus, employment in Ghana has become less secured and stable. Even in the public sector and the formal private sector, few employees have written employment contracts.
Ghana has seen significant changes in the GDP growth rate over the years attaining a middle-income status in November, 2010. Regardless of the GDP growth, unemployment 8 rates have been fluctuating. This means that government emphasis of and reliance on CM GDP growth statistics for assessments and decision making must be reconsidered since the ^ GDP growth rate has not been impacting positively on employment in Ghana. The high unemployment rate has impacted negatively on the levels of wages and salaries in Ghana. th All other things being equal, the excess supply of labour over demand for labour forces the
0 price of labour downwards.
The introduction and implementation of the SSSS in 2009 aimed at improving salaries in ® the country. Its implementation, however, led to increasing levels of government expenditure
1 on public sector payroll. Eventually, the government placed a ban on public sector employment which further exacerbated the unemployment situation in the country. The minimum wage is inculcated into the base pay calculation of the SSSS and has helped to enhance public
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in the informal sector where regulations are weak, the main beneficiaries of the salary adjustment programmes are the public sector employees.
Finally, significant wage differentials exist between formal sector and informal sector employees, wage-employment and self-employment and between the private sector workers ^ and public sector workers. The public sector remains an important source of employment because in practice, employees in the sector are the major beneficiaries of labour market legislations enacted during the period for the study.
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