July 25, 2024

Determinant for 2024 salary increment announced

2024 salary increment announced

2024 salary increment announced

Determinant for 2024 salary increment announced

Negotiations for 2024 salary increments for public sector workers are likely to begin in the third quarter of this year. This is because, under the supervision of the international monetary fund, salary increments were concluded before a budget is read. A major determinant for 2024 salary increment announced by the Band of Ghana would influence the negotiations for next year’s salary.

History of salary negotiations

Negotiations for salary increases used to be done in the effective years. However, after the implementation of the Single Spine Salary Structure (SSSS), salaries were usually concluded before the budget for the effective year is read.

The practice where negotiation for salary increments is concluded and factored into the annual budget continued under the last IMF program. The last IMF program started in the year April 2015 and ended in the year 2019.

The annual budget for the country, which is an estimate of the government’s revenue and expenditure is read in parliament every November. The timeline for reading the budget is guided by acts of parliament. Therefore, the reading of the budget can not be presented after the timelines set by the law.

It is therefore expected that the government will have no flexibility, under the International Monetary Fund, to conclude salary negotiations after a budget is read.

Determinants for salary negotiations

Several factors are considered when negotiating salary increments for public sector workers. While some of the factors are considered as major factors, other factors are considered as minor.

One of the major factors that are considered during negotiations for salary increases is headline inflation.

Headline inflation

Headline inflation is the year-on-year inflation rate. The inflation rate is the rate at which prices are increasing in the economy. A positive inflation rate means prices are increasing while a negative inflation means prices have reduced below the reference point. Negative inflation is also called disinflation.

Positive inflation, therefore, means prices have increased over the last time prices were collected.

A high positive inflation rate means prices have jumped over the period. A lower inflation rate however means prices have increased but at a marginal pace which may not even be noticed.

Why inflation rate is important for salary negotiations

The inflation rate affects the value of workers’ salaries. The primary purpose of salary increases is to maintain the value of workers’ salaries.

This is because a worker should be able to afford the same sets (basket) of expenditure with his salary over a period. The inability of an employee to afford the set (basket) of goods and services using his salary has many negative consequences for the employee and the employer.

Salaries are mostly increasing to ensure the employee can access the same set (basket) of goods and services after prices have gone up in the form of inflation.

Negative consequences of salary Lossing significant value

When prices of goods and services are increased without a corresponding increase in salaries:
1. The immediate consequence is that it is assumed the worker is recruited on a lower salary scale that the employee may not have accepted such an appointment
2. The worker will try to find other ways and means to gain an extra income. The ways and means may include stealing at work, absenteeism from work to do outside work, embezzlement, and many more
3. Lack of motivation to go to work and even lack motivation to perform tasks to the very best.
4. Emotional trauma for the employee both at work and at home
5. Attrition of employees to other employment. The best employees are the ones to exit the institution for better or corresponding wages.

Why the salary increment must reflect inflation

Employers try their utmost best to increase the salary of employees to match inflation. It is in the interest of the employer to pay salaries that correspond to the job description for the employee. This will prevent the best employees with options from leaving.

It is not in the best interest of the employer to allow the best employees who have been very well trained to use the instructions and resources to exit.

Employees will also have a better emotional and psychological state of mind to report for work and perform their duties to the expectation

The employee will have the appropriate financial state of mind at home.

The employee will not risk his life, time, and job to begin any menial or unsanctioned job.

See also: 6 Factors to consider when taking loans

Determinant for 2024 salary Increment announced

The Bank of Ghana has announced that the projected annual inflation rate estimate for December 2023 is 29%. This means that the Bank of Ghana expected prices of goods and services in the country to increase by 29% in December 2023 over the price levels in December 2022.

The announcement was made by the Bank of Ghana during its MPC briefing in March 2023.

Labor Unions and the government of Ghana will be negotiating a 2024 salary increment using the estimated 29% inflation rate for December 2023 a reference point of value.

It must be stated that this does not mean salaries will increase by 29% for the year 2024. To put it in a contest, a thirty percent (30%) salary increment was obtained by labor unions for their members effective 2023 when the headline inflation was 54.1% in December 2022.

Also, it will be recalled that labor unions were demanding a 60% salary Increment during those negotiations. The labor unions were quoting inflation as the basis for their demands.

Source: Educativenews.com

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