AFTER its tepid declaration last year, the organised labour has rekindled its interest in a new national minimum wage for workers. From the present N18,000 minimum wage, the Nigeria Labour Congress demands an increase to N56,000. A factional group led by Joe Ajaero pegs it at N96,000. May 1, 2017, is the NLC’s effective date for the new wage regime, despite federal and state governments’ aloofness.
Given the present harsh economic realities, the two parties involved, the organised labour movement and government, have a mountain to climb. Labour’s first reminder to the government was during the 2016 May Day, amidst heightened concerns about the recession, which began in mid-2014. At least, 27 states at that time had unpaid arrears of salaries. The plague has now spiralled to 30 states, some of which owe between six and 10 months’ arrears. The organised private sector, which will also be affected by a new minimum wage, is savaged by economic bad weather as well.
That the present minimum wage is unrealistic is beyond any argument. And what is the evidence? The Consumer Price Index showed that inflation increased to 18.55 per cent (year-on-year) in December 2016. Price increases of non-farm produce during the period were highest in housing, water, electricity, gas and other fuels, clothing and footwear, and education. They vacillated between 17.84 per cent and 27.27 per cent. Unfortunately, the trend has not abated.
As a result, many families are facing untold hardship, ranging from hunger to lack of access to health care and withdrawal of pupils from school as fees are not paid. In Abia State, public primary and secondary school teachers refused to resume on January 9 after the Christmas holidays due to the five months’ salary arrears owed them. With January about to end, the arrears would soon reach six months. This is just one segment of its workforce.
Some states now pay workers’ salaries in fractions to enable them to keep body and soul together. Save for the economically buoyant Lagos State and Cross River State, with its marvel in managing public finance – where salaries are sometimes paid at the beginning of the month, instead of at the end – it is a race against time for most of the states.
Recession notwithstanding, wage reviews have a five-year cycle. It means, therefore, that the N18,000 minimum wage, enacted in 2011, is one year behind in being reviewed. Ironically, even when the revenues of states had not fallen as drastically as they have now, states had considered the minimum wage as an albatross, and therefore, could not be implemented. A state like Benue, under Gabriel Suswam’s administration, once pleaded with those earning N18,000 to donate N6,000 to the government in a general pay cut plan to clear salary backlog.
Governors’ half-hearted implementation lasted till November 2015, when the Nigerian Governors’ Forum openly declared that its members were no longer in a position to continue with the minimum wage payment. The forum’s chairman and governor of Zamfara State, Abdulazeez Yari, said the wage policy came when oil prices averaged $100 per barrel; and as it declined to as low as $27 per barrel, it was irrational to continue to stick to it.
But the situation could have been different if the state and federal governments had not depended solely on oil revenues for survival, abused public finance recklessly and turned government into the biggest business in town.
The problem with a minimum wage hike in Nigeria is that it provides a window for a general salary review. Worldwide, minimum wage is set and need not trigger a general pay review. Efforts in the past to limit it to workers in the lower cadre have always been greeted with industrial unrest by senior civil servants, who would not like to be left out. This is partly why federal and state governments are cynical about a new wage demand now.
The spell of cash squeeze, which has undermined governance, could be seen, for instance, from the Federal Government’s N145 billion monthly wage bill, which outweighs its monthly receipts of between N120 and N127 billion from the Federal Accounts Allocation Committee. According to data from the Office of the Accountant-General of the Federation, showing how Federation Account performed in August 2016 (for July sharing), Akwa Ibom State, which used to gross over N30 billion monthly before recession, had N12.2billion gross, but collected only N4.5 billion, after statutory deductions. This applied to all the states. Bayelsa State received N2.051 billion; Gombe State N823 million; Ebonyi State N1.4 billion; and Ogun State N420 million.
Since the Federation Account’s fat receipt every month is based on crude oil sales and price volatility, the present gradual price rally averaging $54 per barrel, cannot be a reliable basis for any general wage balloon. This is the bitter truth! Market uncertainty is ever present. Abuja has tried to help states by giving them two bailouts, the last of which was the reimbursement of their share of the Paris Club debt relief refund before the end of last year.
Yet, the situation remains dire.
Therefore, what is required now is for all hands to be on deck to revive the economy and put it in a better stead to carry and raise the existing wage burden. It bears repeating that brazen plundering of public treasury and reckless spending by past feckless public officials created the present economic austerity. Sadly, indolent labour leadership watched all this, oblivious of how it impinged on workers’ welfare and national well-being. Nigeria needs an activist labour union that will be a tool in the fight against corruption, and its members acting as watchdogs of transparency and good governance.
It speaks ill of local branches of labour that under the guise of protecting workers’ interest, they sometimes stand in the way of many state governments trying to establish their real workforce through a head count or other policy measures such as biometric data capturing that will fish out ghost workers. However, we expect a state like Lagos, and a few others doing relatively well, not to wait for a minimum wage review from Abuja, before they can put smiles on the faces of their workers. Indeed, the times are hard!
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