NATIONAL MINIMUM WAGE: WORKERS’ WELFARE OR WORKERS’ FAREWELL
by Oki Samson
President Buhari (right) in a handshake with Comrade Ayuba Wabba, President, Nigeria Labour Congress (NLC) and Chairman of Committee Mrs Ama Pepple shortly after the President Buhari inaugurates Committee on Tripartite National Minimum Wage in State House.
A major bedlam was averted in the economy when President Muhammadu Buhari GCFR acceded to the yearnings of the labour force in the country for an upward review of the salary scale of workers in the public and private sector of the economy from the current N18,000 minimum wage to N30,000. If this didn’t happen, the country would have been thrown into the throes of economic woes and loss necessitated by industrial action which was billed to commence on Tuesday 6th November, 2018.
Nigeria Labour Congress (NLC), Trade Union Congress (TUC) and their affiliate groups had threatened that they were not going back on the planned indefinite strike if the results of negotiation by the wage committee were not granted by the government. Mr. Uche Ekwe, Head of International Relations of the NLC had revealed that: ‘We will never attend any further meeting for the purpose of negotiating or debating another national minimum wage having agreed on N30,000 last month with the federal government. We have concluded all matters related to new national minimum wage and if the politicians are unwilling to pay that basic minimum but continue to connive and work against the interest of the Nigerian workers they should hold themselves accountable for that and leave out of any meaningless meeting.’
At the occasion of the submission of the report of the National Minimum Wage Tripartite Committee led by Mrs. Amal Pepple, the President appreciated the committee for accomplishing its arduous task with few instances of rancour and misgiving by always coming back ‘to the negotiating table with a common goal of improving the welfare of Nigerian workers. On behalf of all Nigerians today, I want to thank you for your commitment and sacrifice in getting us to where we are today’, and then stressed his commitment to have a new National Minimum Wage Act in place in the near future.
Membersof Nigerian Labour Congress during a protest
HOW THE NEW MINIMUM WAGE WAS REACHED
It would be recalled that Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) had proposed a salary review from N18000 approved in 2010 but implemented in 2011 to N56000 in 2016. This is in line with the National Minimum Wage Act which stipulates that the wages of workers should be reviewed every five years. Comrade Ayuba Wabba, the President of NLC had said at a news conference in 2016 that: ‘We made a formal proposal to the Federal Government of N56,000 to be the new minimum wage. Our argument is that, yes, it is true that the economy is not doing well but the law stated that wages for workers must be reviewed after every five years.’ This proposal necessitated the inauguration of the Tripartite Committee in 2017 and after much deliberation and negotiation which lasted a year, the committee reached the agreement for N30,000 to be the national minimum wage.
According to Channels TV, Ms. Amal Pepple, the Head of committee noted: ‘After carefully weighing these critical factors [of high cost of living, inflation and the exchange rate] and bearing in mind the overriding interest of the economy the Committee while noting the offer of N24,000 by the Federal Government is recommending an increase in the existing minimum wage from N18,000 to N30,000. The Committee has also produced a draft national minimum wage bill 2018 for condition by government. We strongly believe that the enactment of the draft bill into law is very critical to the operation and future reviews of the National Minimum Wage.’
President Buhari with L-R: Chairman of Committee Mrs Ama Pepple, Minister of Labour Chris Ngige, Chairman National Commission on Salaries and Wages Chief Onwuka Egbule, Governor Of Imo State Rochas Okorochas, Governor of Kebbi State Atiku Bagudu, Governor of Osun State Rauf Aregbesola and Governor of Plateau State Simon Lalong as he inaugurates Committee on Tripartite National Minimum Wage in State House.
WE HAVE PASSED THIS ROAD BEFORE…
This is not the first time that minimum wage would be an issue in the country. It has usually been a faceoff between the government and labour unions. In fact, many wage increase have come as a result of some form of activism, industrial strike, rallies and protests. The struggle which dated back to 1945 when workers staged 45 days of general strike to demand for a Cost of Living Allowance (COLA) to the strikes which led to the first structured minimum wage in the country, National Minimum Wage Act of 1981 till the recent N7500 minimum wage which took over a year of consistent agitation before it was increased to the current N18,000 in 2011; and the several others in between, wage increase had usually come with the cost of labour agitation.
Government in its usual bureaucratic style does not fail to establish committees that ‘will look into the matter’ as the rhetoric typically conclude. But implementation of negotiation and recommendation by Nigerian policymakers is the greatest undoing as they lack the political will to comply. Many times, it is fulfilled haphazardly, at other times it is jettisoned entirely.
It is thus important to enjoin workers who are excited about the new declaration by the Federal Government that it is not yet uhuru and that they should exercise caution as this is just the first bend in the long journey. The legislature would also deliberate the draft wage bill before it is passed into law. Then, comes implementation by the Federal Government. This process may not come to fruition this year.
STATES RAISE AN ISSUE
By the time, the draft bill becomes a law and the Federal Government begins to pay N30,000 minimum to its workers, how many states will be able to follow suit. This brings to question the viability of many states in the federation which heavily depend on the federal allocation to meet their capital and recurrent expenditure needs. Even under the current salary scheme, some states are still owing workers’ salaries ranging from 2 months and upwards. This is in spite of bailout funds that was shared by the Federal Government to states.
How easy can such states cope under this new system especially when federal allocation may not necessarily increase but budget for payment of salaries will definitely increase? Will it not infringe on development projects like road and infrastructure, education, healthcare, transport and others, thus compounding the misery of the masses.
If the bravado of many state governors is anything to go by, then there is safety in sight for state government workers but the reality on ground does not support their claims.
The private sector which is expected to follow suit has not been duly consulted in this arrangement despite the harsh economic climate of doing business in the country.
A RESPITE, NOT THE SOLUTION
Economists have raised concerns about the minimum wage review. They argued that more money in the pocket may not always be good news for the economy and advised that there are better alternatives that could improve workers’ welfare as well as that of the citizenry at large.
Top on the list of worries is inflation. The Nigerian Bureau of Statistics (NBS) put the rate of inflation in the second quarter at 11.23 percent. With such a rate, more money will chase fewer goods and eventually, N30,000 will soon be inadequate like the current N18,000 in proper monetary value; hence tamper with the purchasing power. This would also be aided by the Nigerian peculiarity in which traders arbitrarily push up prices of commodities simply because they understand that workers’ salary has been increased, and noting that once prices go up in the nation they rarely reduce.
Another factor is the exchange rate which currently stands well over N300 to a dollar, Henry Boyo, foremost economist wrote More Money or Better Value article published in Vanguard newspapers as far back as 2006 remarked: ‘The need to consolidate the naira equivalent from the money market as well as the additional currency printed for this purpose remain the bane of our monetary system. So long as this system persists, the naira will continue to be under pressure and will depreciate, even in the face of rapidly rising external reserves; this is an economic paradox, if ever there was one.’
Another factor is the likelihood of retrenchment by state government and private sector. Dr. Ahmed Adamu, a petroleum economist wrote: ‘Increasing minimum wage can cause many people to lose their jobs, as some companies will have to be forced to sack their employees to be able to maintain normal profits. New companies will have to cut down the number of the employees they intended to employ, and reducing the number of labourers may affect the productivity of the individual companies, which reduces the aggregate production within the economy, thereby reducing the country’s economic growth rate. Investment in the country will reduce as prospective investors will be discouraged seeing the increasing inflation and wage increase.’
Alternatives such as reduced cost of goods, improvement of social infrastructure, impetus for enterprise, soft loans for small businesses, and health insurance could be pursued by the labour unions, which would have far-reaching impact on the workers and the entire populace.
While increase in workers’ monthly pay is a good idea and it is backed by the constitution, it may just be a respite. However, the minimum wage also call on government at all levels to become creative about how to generate more revenue that will be used to meet the ever-increasing need of the populace.
