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GH¢250 million, 5,000 jobs lost to dumsor between 2012-2015 - ISSER

Aug. 24, 2017, 1:34 p.m.

Some 885 manufacturing firms in Ghana lost a total of GH¢250million between 2012 and 2015 due to the non-availability of power, a study conducted by the Institute of Statistical, Social and Economic Research (ISSER) has revealed.

The loss was on account of huge drops in productivity levels of the firms during the protracted power crisis that hit the country about five years ago.

The study which was on the theme “How did the 2012-2015 power crises affect small and medium manufacturing firms in Ghana revealed that “due to the non-availability of power, the firms were losing about 12 percent of their output on monthly basis; there were 10 days in every month that the firms were without power and so for those 10days they were losing roughly 12 percent of productivity, amounting to GH¢250million between 2012 and 2015.”

The manufacturing firms (small and medium sized)included food and beverages, textiles and garments and wood processing.

285 firms out of business

The researchers spoke to business owners and they confirmed that they had folded up due to the “dumsor”. Each of the firms was employing at least 20 people, meaning over 1000 employees had lost their jobs within the period of the crisis.

According to economist, Dr Charles Ackah of ISSER, 230 firms could not be traced at all during the survey.

“We picked up their addresses, followed up and nothing was happening there; we did our interviews for a period of two months and each time we went there they were not working; there was no activity,” he said.
5,000 jobs lost

In all about nearly 285firms closed down, meaning over 5,000 jobs have been lost, he said.

Commenting further, Dr Ackah said they found out that the energy crisis had significant negative effect on labour productivity and total factor productivity of firms.

“Since the average number of days with outages in a month was 10, it means that reducing please the number to zero could have increased productivity of the firms by 10 per cent.

The power crisis led to a 10 percent fall in monthly productivity of these manufacturing firms. This is a very large effect.

It found out further that the electricity outages led to a reduction in raw materials and some reduction in firms stock of machinery.

“These findings suggest that while firms flexibly alter inputs such as machinery and raw materials in response to electricity shortages, some inputs such as labour tend to be less flexible potentially wing to rigidities in the labour market,” Dr Ackah stated.

It stated that the reduction in labour productivity could stem from the reduction in the amount of capital available to workers.