Reviewing pension age upward not feasible, says Baffour Awuah

Calls on the government for an upward amendment of the 60-year retirement age are prudent, but the data on unemployment and Ghana’s relatively low life expectancy do not support such calls, Ignatius Baffour Awuah, the Minister of Employment and Labour Relations, has said.

Baffour Awuah said even though the government has implemented several policies to better the lives of Ghanaian citizens and through that increased average life expectancy, the number of unemployed young Ghanaians is still worrying – and any move to increase the pension age now would oblige more youth to wait longer to enter the job market.

“You would normally link your pension regime with your life expectancy. You will agree with me that in Europe they have a longer life expectancy than Ghana, and so when our life expectancy increases significantly we may have to look at this.

“Given the fact that we may also have a large number of unemployed persons waiting to be engaged, there is a debate: would you like to keep your old workforce in the workplace and then allow the young blood to remain on the river-bank, or you would like to give space to the young ones?” Baffour Awuah said. 

The minister was speaking on the sidelines of the 60th annual general meeting of the Ghana Employers’ Association in Accra.

Open to discussion

Despite his stance on the proposal, he said the Ministry of Employment and Labour Relations is open for discussion to find how best to handle the proposal, as some say it would increase the capital available for pension funds, allowing them to expand and restructure their operations.

“Certainly, what we seek to do every day in our lives is to have a better life. As we have a better life as a result of good policies, you get good public health care and people live longer than before; so, our life expectancy is moving up.

“But you’ll agree with me it hasn’t reached the level of our European counterparts. They have the luxury of increasing their working years. But as for us, it is not for me to decide: it is a debate we should all contribute to. If the nation at any point in time finds it suitable to increase the pension age, so be it; we will work with it as a policy,” he said.

Baffour Awuah said just as the government this year announced new rules to guide post-retirement contracts for academic staff of public universities after long deliberation, it is also open for a case to be made for amendment of the law on retirement.

The time is right

Under the new rules for academic staff of public universities, even though the mandatory retirement age for academic staff of public universities will remain 60, professorial-grade staff (associate professors and professors) will be eligible for post-retirement contracts until the age of 70 – in line with constitutional provisions.

However, the economist William Baah Boateng and the Ghana Employers’ Association insist that the time is right for the country to take another look at the retirement age.

According to Professor Baah Boateng, head of the University of Ghana’s economics department, many people are retiring at the age of 60 but can offer the labour force more to accelerate economic growth. Therefore, he argues, the government and stakeholders must find a way to use their energies for nation-building.

Life expectancy data

The current retirement age is 60, in accordance with the National Pensions Act 2008 (Act 766), as amended by the National Pensions (Amendment) Act 2014 (Act 883). 

This means that at age 60, public and private sector workers are expected to stop active work, except in the case of special dispensations created for people with unique skills.

For the past decade, Ghana’s life expectancy has been on the ascendency. From 60.81 years at a growth rate of 0.56% in 2010, it has risen to 64.17 at a growth rate of 0.4% in 2020. 

The current life expectancy of 64.17 marks a 0.4% improvement on 2019.

Unemployment data

The total unemployment rate in Ghana has shrunk by roughly 3.5 percentage points in four years, despite the devastating effects of COVID-19 on the job sector and the economy at large.

At a “Meet the Press” session recently, the Minister of Employment and Labour Relations pointed to a report from the seventh round of the Ghana Living Standard Survey (GLSS7, 2019), which states that the total unemployment rate for Ghana is 8.4%, against the rate of 11.9% reported in the GLSS6 of 2015.

This rate is higher among females (9.2%) than males (7.5%). In terms of regions, Greater Accra recorded the highest unemployment (11.8%), followed by Ashanti (10.3%). 

The Volta Region recorded the lowest unemployment rate of 5.8%, followed by the then Brong-Ahafo (6%). The youth unemployment rate has also declined from 16.9%, as reported in the GLSS6 of 2015, to 12.6%, as reported in the GLSS7 of 2019.    

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