adminIn Ireland, wage bill reductions were carried out at the height of the economic problems of 2008.
Job losses were the most significant element in reducing the overall wage costs of private sector companies.
Other measures applied by employers included reducing working hours and a reduction in average hourly earnings.
In Ghana, where wage spending had been a source of significant budget overruns, the government’s Poverty Reduction and Growth Facility-supported programme included a performance criterion on the wage bill in 2005.
A ceiling was established to support Government efforts to bring wages under control, while a computerised payroll for the public sector was developed.
In Mozambique, similar concerns about a loss of fiscal control as a result of a ballooning wage bill led the government to introduce a quantitative benchmark on the wage bill in its PRGF-supported programme in 2004.
The benchmark focused attention on factors underlying wage increases, and highlighted the need to link civil service hiring decisions to overall development objectives and comprehensive civil service reform. It also served to stress concerns about potential macro-economic problems that could result from entering into long-term expenditure commitments without long-term donor commitments to finance them.
Mozambique has successfully moved beyond the post-conflict environment under which the ceilings were initially established, and the wage bill conditionality was dropped in June 2006.
Nicaragua agreed to the introduction of a performance criterion on the wage bill against a background of public sector wages being well above comparable private sector wages, while the wage bill had grown rapidly to reach about 8,5 percent of GDP at end of 2005.
The performance criterion reflected concerns about the risk of a wage price spiral that could undermine the country’s external competitiveness.
The PRGF-supported programme in Nicaragua was concluded in December 2006. — Wires.
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