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 The International Monetary Fund deal is designed to restore fiscal
stability and kickstart growth in a country that recently lost its
reputation as one of Africa's strongest economies after years in
which its GDP grew at around 8 percent thanks to exports of gold,
cocoa and oil.
The end of the strike by the Ghana Medical Association makes it
easier for the government to honor the $918 million IMF program in
the short-term. It also strengthens Mahama's hand should other
disaffected unions stage industrial action, political analysts said.
But the decision by doctors to suspend their strike for better
working conditions makes it harder for other civil servants to win
redress for inequities and declining wages, potentially storing up
grievances against Mahama's government.
The moment of truth will come next year when he faces opposition
leader Nana Akufo-Addo in an election in December expected to be a
repeat of the tight contest in 2012.
"The pressure on authorities to appease popular demands will
intensify as the elections draw nearer," said Cobus de Hart, of NKC
African Economics. "The challenge for government will be to prevent
the snowball from getting too large."
Recent history shows the risk. Wage growth ballooned in 2012 ahead
of the last election, causing a spike in the budget deficit and
triggering a fiscal crisis that includes a debt-to-GDP ratio near 70
percent.
To keep to its IMF commitments, the government needs to contain pay
agreements with civil servants to under 10 percent in its pre-budget
round of talks with unions and ministries, according to Eurasia
Group.
That may not be easy for Finance Minister Seth Terkper as he
prepares the November budget. Inflation in July stood at 17.9
percent and the cedi currency has fallen sharply this year,
undermining the real value of wages.
However, the Fund deal was sanctioned by parliament so both of the
main parties should support government measures to keep it on track
even as pre-election tensions rise, said John Gatsi, a senior
lecturer in finance at the University of Cape Coast.
"The end of the strike provides ample opportunity for government to
accommodate all the (labor) issues for the preparation of the 2016
budget process," he said.
LIMITS TO UNION POWER
The strike by Ghana's 2,800 doctors who were pushing for more
clearly defined conditions of service including payments for
additional work is not the only possible labor action.
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The Coalition of Concerned Teachers said it was laying the
groundwork for a strike in September when schools reopen to push for
better conditions of service and the National Association of
Graduate Teachers has made similar threats.
In particular, the Coalition wants to reform a system under which
new teachers can work for up two years before receiving their first
paycheck and then only receive a part of their arrears, said Ernest
Opoku, president of the coalition.
"We make our own decisions and we have issued threat upon threat.
They (doctors) had to strike first, but it doesn't change the way we
want to go about it," he told Reuters, adding that the coalition had
about 20,000 members.
Despite the threats, the chances of a broad strike that could shake
the government are undermined by the fact that there are multiple
unions and associations in Ghana even within the same profession and
often they compete for membership and funds.
For example, there are at least three associations of school
teachers. The biggest and most established, the Ghana National
Association of Teachers, has no plans to join CCT action.
As a result, it is difficult for public service unions to achieve a
consolidated challenge to government. High unemployment also reduces
the leverage of private sector, non-professional unions because
employees are easy to replace.
"Professional associations can use their muscle but the threat of
strike action leads quickly to negotiation," said Yao Graham, head
of the Third World Network, a research and advocacy group. "There is
a climate in Ghana to resolve differences quickly."
(Editing by Daniel Flynn and Anna Willard)
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