The Employment and Labour Relations Minister, Mr Haruna Idrrisu, has called for a marked paradigm shift from the use of “traditional classical economics in measuring standard of living based on per capita income” to the use of employment.
He advocated the need to focus on employment since “that is by far a better measure of living standards of a people”.
Sharing some thoughts on the subject in an interview with the Daily Graphic in Accra on Tuesday, he said employment focused on individual persons and their sustenance and therefore, “employment and job creation must be used at all times as a measure of how we are contributing to improving living standards in the country”.
Generally, the standard of living measures people’s material welfare. For instance, according to Helen Clarke of the United Nations Development Programme (UNDP), equity, dignity, happiness, sustainability are all fundamental “to our lives but absent in the Gross Domestic Product (GDP).
“Progress needs to be defined and measured in a way which accounts for the broader picture of human development and its context,” she said.
Other economists have held the view that the baseline measure is real national output per head of population or real GDP per capita.
Meanwhile, just like Mr Iddrisu indicated, real income per capita is an inaccurate and insufficient indicator of living standards.
For many economists, there is a growing disconnect between GDP and well-being. As a result, some others argue that national income data can be used to make cross-country comparisons, adding that this requires converting GDP data into a common currency; making an adjustment to reflect differences in the cost of products in each country to produce data expressed as purchasing power parity standard; and the purchasing power parity (PPP) dollar takes into account the fact that it is cheaper to live in some countries than others.
Problems using national income statistics
A website on economic matters, tutor2U, indicates that official data on GDP understates the growth of real national income per capita over time due to the shadow economy and the value of unpaid work by volunteers and people caring for their family.
It said the “shadow economy” includes illegal activities such as drug production and distribution, prostitution, theft, fraud and concealed legal activities such as tax evasion on otherwise-legitimate business activities such as un-reported self-employment income.
It noted that often, official GDP data is inaccurate. For instance, it said many “countries in sub-Saharan Africa do not update their reporting often enough, and so their GDP numbers may miss large and fast-growing sectors, like cell phones.”
In 2014 according to the website, Nigeria became the largest economy in Africa (overtaking South Africa) after a fundamental reassessment of their GDP calculation, adding that “GDP data may become a target for political manipulation.”
Casual worker phenomenon
Subsequently, Mr Iddrisu announced a review of the casual worker phenomenon in Ghana.
According to him “many a Ghanaian worker had their rights abused and their entitlements denied on matters relating to health, safety and occupational environment not up to standards to support decent and productive work”.
He also expressed regret that the country was behind labour market information systems and the lack of a dedicated manpower needs of the country.
Mr Iddrisu said to address the problem regarding casual workers in the country, the ministry would soon compel all private employers to leave their staff employment data with the Labour Department, declaring the status of the casual worker.
“We will be interested in knowing when they were employed; their level of compensation – whether it meets the daily minimum wage requirements; their working environment and conditions and for how long they have been employed as casual workers.
Mr Iddrisu said “Defaulting companies will be sanctioned accordingly”.
Source: Daily Graphic