With public hearings held in the six geopolitical zones of the country by the tripartite committee on the new minimum wage, the crusade for its actualisation has reached the final stages. During the recent May Day workers rally in Abuja, the organised labour reminded state and federal governments of the dire consequences of non-compliance with the wage when finally adopted.
The President of the Nigeria Labour Congress, Ayuba Wabba, also cautioned the Federal Government against missing the timeline for its implementation, which he put at August, just as he stressed the congress’ readiness to resist the penchant for renegotiation by states. Government had earlier said the new minimum wage would be unfolded in September. The speech by Vice-President Yemi Osinbajo at the rally summarised the stance of the Executive arm of government: “It is my hope that the tripartite committee, comprising government, labour and the private sector, will expedite its assignment to enable the Federal Government to present an Executive Bill on a new national minimum wage to the National Assembly.”
From a N56,000 initial demand, labour has increased it to N66,500, citing as reason the increasing cost of living. The extant N18,000 minimum wage was adopted in 2011 and due for a review after five years, going by global best practices. Agitation for its review has been unrelenting amid the irony of its non-implementation by some states because of dwindling revenues.
It is hard to fault labour’s logic against the N18,000 minimum wage. Inflation, which has been in double digits for the past three years, only dropped in February from 14.33 per cent to 13.34 per cent in March year-on-year, according to the National Bureau of Statistics. This being the 14th consecutive decrease, and a naira weakened by the exchange rate of N360 to $1, underline the depth of poverty in the land.
The bitter truth about the economy is that a big industrial disquiet looms in most states with what labour is demanding. What is more, 27 states have periodically relied on the Federal Government’s bailout to clear arrears of salaries and pensions.
Therefore, the governors’ position on wage increase should be looked into. Governor Nyesom Wike of Rivers State was forthright when he canvassed that states be allowed to fix it, according to their fiscal strength. He said “… the single national minimum wage system is yet another lie that betrays the distortions in our federal (system) and the structured dislocation of states in the power equation between the Federal Government and the federating states.” Other governors have raised the need for the revenue sharing formula, presently skewed in favour of the central government, to be reviewed for states to get more funds to meet up with the demands of the salary review. This is unavoidable.
Without question, wage review has a global template of a five-year cycle. But a common ground or a win-win situation is what is desirable here. The vogue in Nigeria has been that minimum wage increase is a salary hike for all. The economic consequences of this are feral: prices of goods and services spike, as job losses occur.
This should not be the case with the present effort. Workers on the lower rung of the salary ladder are the most economically vulnerable. As a result, the struggle to improve their living conditions could be achieved if the salary increase is limited to them for the time being. Any attempt to base the increment on the new rally in the prices of crude oil is bound to backfire. All the parties should learn from Nigeria’s recent economic haemorrhage, which began in mid 2014, following price volatility in the global oil market.
Labour should face our political and economic realities in its agitation for a better life for workers. Nigeria is a federation and should be run accordingly. It is important for labour leaders to appreciate the fact that the most critical factor in the implementation of minimum wage is the ability of a state to pay.
This is why the minimum wage in the United States varies from state to state. It is determined by indexed annual increment based on the cost of living or consumer price index. Consequently, the state of California, currently adjudged the fifth largest economy globally, has an $11 per hour minimum wage. Its wage structure released in 2010 when it was $10.50 per hour has an annual inbuilt increase that will make it $15 per hour by 2022. Despite the US federal minimum wage being $7.5 per hour, the state of Georgia has $5.15 per hour. But there are employees in the state whose remunerations are subject to the Federal Minimum Wage Act.
Down home in Nigeria, the monthly federal allocations to the 36 states are as varied as their internally generated revenues. Lagos State’s N333.96 billion internally sourced revenue and N3.59 billion for Yobe State in 2017; or the N2.67 billion Borno State generated in 2016, according to the NBS data, showed empirically that states do not have equal resources or ability.
However, governors can mitigate the implementation conundrum by being imaginative: do away with bloated wage bills through rigorous application of the Integrated Payroll and Personnel Information Scheme. This has fished out thousands of “ghost workers” at federal and state levels, and hundreds of billions of naira saved as a result. Surprisingly, some states have yet to deepen the process.
Governors who still waste funds on building new airports, when only two out of existing 22 airports in the country are viable; set up two universities when existing ones cannot be funded, and have needless army of political appointees might soon see their states in the vortex of financial crisis and labour unrest. Every state in Nigeria is an economic unit, which should develop. For this to happen, with its multiplier effect of improved workers’ condition, ideas in governance, judicious use of public funds and zero-tolerance for treasury looting by public officials should be entrenched.
