* IMF has warned Ghana on ballooning wage bill
* Analyst warns deficit miss could rattle financial markets
* Doctors have suspended outpatient consultations
By Matthew Mpoke Bigg
ACCRA, April 16 Oil-rich Ghana's effort to slow
rampant public spending may be undone by middle-class
professionals demanding that a generous, 2010 wage policy be
implemented in full.
The strikes - by doctors, professors and pharmacists - pose
the sternest test for President John Mahama since he took office
in January and raise questions over the course of economic
policy in one of Africa's hottest frontier markets.
Mounting pressure for generous public sector wage rises in
the newly oil-producing nation could make it tougher for Ghana
to meet its target of trimming its fiscal deficit to 9 percent
of gross domestic product this year, from 12.1 percent in 2012.
The International Monetary Fund last week urged Ghana to
control its "ballooning wage bill" after salary costs jumped 47
percent in 2012, an election year. A shortfall in oil production
helped push the fiscal deficit to twice the forecast level.
Concerns over the high deficit prompted ratings agency Fitch
to downgrade Ghana's outlook to negative from stable in February
and have raised concerns among economists and investors.
"If we don't get everybody to understand this is not a
question of power playing then the 9 percent the government has
targeted for 2013 is not only not achievable but the financial
markets will be rattled," said Joe Abbey, executive director of
the Center for Economic Policy Analysis think-tank in Accra.
For decades, Ghana lagged behind its western neighbour Ivory
Coast and regional giant Nigeria. Now it is attracting investors
with a combination of oil, precious metals and cocoa, plus the
political stability evidenced by successive peaceful elections.
However, the strikes come against a backdrop of energy
shortages that have led to power rationing as domestic demand
has boomed following the start of oil production in 2010.
After briefly appreciating early this year, the cedi
currency has also resumed a gradual slide against the dollar
, while inflation has ticked higher in recent months,
reaching 10.4 percent in March. The yield on the government's
benchmark 2-year bond has ticked up to just under 17.5 percent.
The Ghana Medical Association (GMA) union said its strike
was not motivated by a deal-me-in mentality to Ghana's oil
wealth, which came on stream in 2010. It said the government had
failed to properly implement its own salary review policy.
"Government has no respect for doctors and for healthcare
delivery," said GMA president Kwabena Opoku-Adusei. "When it is
work they say: 'It is an essential service'. When it is salary
they say: 'It doesn't matter'."
POUND OF FLESH
Union sentiment has been hardened by a recent decision to
award members of parliament a hefty pay increase and by
revelations of massive spending on elections last year.
Both factors make it harder for the government to hold its
line in the face of union demands, according to the opposition
National Patriotic Party (NPP).
"Now everybody is demanding their pound of flesh," said
former minister and NPP communication director Nana Akomea.
Public sector doctors suspended outpatient consultations,
the union said, causing hardship in a country of around 25
million whose medical system is already stretched.
"I'm not in favour of the strike but if it will make the
government pay attention then perhaps they have to go on with
it," said Anita Afonu, an independent film maker based in Accra.
The strikes are rooted in government efforts to tackle
disparities in public salaries in line with the 1992
constitution and to keep talent from joining the private sector.
In 2010, Ghana began a five-year migration of 480,000 public
servants onto what it called the Single Spine Pay Policy. Police
were the first group to switch and received a 240 percent rise
because they were one of the most underpaid groups.
That fed expectations of comparable windfalls for others.
"The issue is that (the government) probably did not manage
the public expectations properly," said George Smith-Graham,
chief executive of the Fair Wages and Salaries commission.
The GMA said there are around 3,000 doctors who rank among
the elite of Ghana's civil servants and merit a market premium
payment. A senior medical specialist doctor earns around 5,000
cedis ($2,500), according to the wages commission.
The Ministry of Information last week said the strike was
illegal and urged unions to abide by the decisions of the
government's National Labour Commission and return to work.
Talks on Friday between unions, the wages and labour
commissions and government representatives made progress, the
Secretary General of Ghana's TUC, Kofi Asamoah, told Reuters.
Pay and pensions for doctors in Ghana is low by
international standards, driving many to emigrate to the West.
"The young ones look at the old ones who have retired and
they don't want to go that way," Opoku-Adusei said, adding there
were many examples of respected doctors who "died like paupers".