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2019: Will Minimum Wage Be Albatross For Politicians?

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The agitation for a new minimum wage reached a crescendo last month when organized labour, epitomised by the Nigeria Labour Congress (NLC) and Trade Union Congress of Nigeria (TUC), couldn’t reach a compromise with both the federal and state governments’ proposal. The fallout is the upcoming ‘mother of all strikes’ to be embarked upon by the organized labour today. OLAJIDE OMOJOLOMOJU examines the issues surrounding the new demand, even at a time no fewer than 26 state governors are owing  salaries arrears of between two and six months

Nigeria’s history of minimum wage cannot be separated from the history of its public service negotiations and increments, dating back to the colonial era and the setting up of Hunts Commission in 1934. It is noteworthy that the first National Minimum Wage Act was enacted in 1981, prescribing a minimum wage of N125 per month, contained in FGN Official Gazette 1981, A53-57.

The minimum wage was revised in 1991 to N250 per month. Another revision was brought in again in 2000, taking the minimum wage to N5,500 per month, and lastly in 2011, it was moved up to N18,000 per month.

On July 1, 2010, the Justice Alfa Belgore Committee submitted a bill on the National Minimum Wage Amendment to the National Assembly with the recommendations for a national minimum wage of N18,000 per month for all establishments in the public and private sectors employing 50 workers and above; an upward review of the sanctions that would serve as a deterrent for not paying the new national minimum wage as follows: a fine not exceeding N100,000 or imprisonment for a term not exceeding six months or both, and in the case of continuing the offence, a fine of N10,000 for each day during which the offence continues; a more frequent review period not exceeding 5 years to be carried out by a statutory tripartite committee that would be appointed from time to time by the President of Nigeria.

The bill was passed into law on March 15, 2011 by both arms of the National Assembly with minor adjustments as follows: that as from the commencement of the National Minimum Wage Act 2011, it shall be the duty of every employer to pay a wage not less than the national minimum wage of N18,000 per month to every worker under his employment and the penalty for failing to pay minimum wage is N20,000 while the penalty for every additional day the default continues is N1000.

With the global economic downturn and particularly, Nigeria’s economic challenges occasioned by the plummeting fall of the price of crude oil, the nation’s major source of revenue, workers all over the world face difficult times, as their wages can no longer take them home.

Most pathetic is the situation which the Nigerian worker has found himself, daily living from hand to mouth. The National Minimum Wage Act, signed into law by former President Goodluck Jonathan, prescribed a minimum of N18,000 as monthly wage for the least paid worker in the country, that is those on Grade Level 1 Step 1, an amount when converted to the United States of America’s dollar at the official rate is less than $50.

In the USA, minimum wage per hour is about $8 and working eight hours a day and five days a week earns an average worker $320, which is far above three months’ salary for an average Nigerian worker.

A 2013 study by the Economic Policy Institute showed that the bottom 60 percent of workers are earning less than they did 15 years ago. Another 2014 report by the Centre for Economic and Policy Research stated that black Americans, who have gained much higher average levels of education over recent decades, have lower chances of earning a living wage today than they had 30 years ago.

As if the plight of the Nigerian worker is not bad enough, governors of Nigerian 36 states announced in 2015 that they could no longer afford to pay the N18,000 minimum wage as a result of the parlous state of the nation’s economy.

The governors arrived at this conclusion after their meeting under the aegis of the Nigerian Governors’ Forum, NGF, at the Old Banquet Hall of the Presidential Villa in Abuja, citing the dwindling global crude oil price that has drastically reduced the resources of the Federal Government which depends solely on oil.

In a communique read by the NGF chairman and governor of Zamfara State, Abdulaziz Yari, the governors said the wage burden became heavier after the price of a barrel of crude oil in the international market went below $40.

The governors said, “We resolved that we must look at ways to enhance revenue generation and at the same time look at ways to cut our overhead costs more especially the political office holders’ salaries and other overhead expenses.

“The situation is no longer the same when we were asked to pay N18,000 minimum wage, when oil price was $126 (per barrel) and continued paying N18,000 minimum wage when the oil is $41 and the source of government expenditure is from oil, and we have not seen prospects in the oil industry in the near future.

“We will diversify our economy in the area of agriculture and mining. But at the same time, we should understand our situation where some of us (states) today are taking N100 million home (monthly allocation) and then have salaries in particular of over N2 billion to pay.”

One sore point here is that while the governors said that they cannot afford paying the minimum wage, none of them resolved to reduce his own salary or do away with the humongous security votes they collect every month and which they do not give an account for, save the governor of Kaduna State, Malam Nasir el Rufai, who announced that he and his deputy will forfeit 50 per cent of their salary because of the dwindling resources of the state.

Reacting to the NGF position, the Nigeria Labour Congress, NLC, speaking through its President, Ayuba Wabba, said that any governor who could not afford to pay the minimum wage should resign from office without delay, warning that any attempt to renege on the payment of the national minimum wage is tantamount to breaking the law of the land.

Wabba had said, “They have been misinforming the people about the N18,000 minimum wage. Minimum wage is not fixed, it was negotiated through a tripartite system; ten state governors represented the governors, the Federal Government and organised private sector were also represented. It was a tripartite process of collective bargaining.

“We had looked at all the indices of ability to pay. It is a law and anybody that refuses to pay is breaking the law of Nigeria and we advise any such governor to resign.

“Why is it that the salaries of councilors, to the highest political office all over the country remains the same? If there is economic challenge, why should it be the workers that will bear the burden? So who are they fooling?

“Can they continue to fool us? When the resources were there, workers were not enjoying. Now that there is a challenge in the system, why should the burden be shifted only to the workers? That is not acceptable to us. This is like a battle for us as we must continue to insist that workers should work in dignity and there must be dignity in labour.”

To the Minister for Labour and Employment, Senator Chris Ngige, the governors were only playing politics with the fact that they could not continue to pay N18,000 minimum wage and advised the governors to get something doing.

Ngige said this during a meeting with the NLC leadership in Abuja, adding that both labour and the governors are to be blamed for the state of the Nigerian workers.

He said, “When the NLC joined the governors in talking about minimum wage, with the governors saying ‘we cannot pay N18,000 minimum wage and NLC saying it is time for us to ask for increase’, we know that these talks are talks that are heating up the system.

“The NLC knows better that the governors are playing politics. This is one matter that you cannot play politics with because it is a matter of rule of law.

“The law in place now is the Minimum Wage Act enacted by the National Assembly and the National Assembly derived its powers from the Exclusive List of the constitution which gives the lawmakers power to make laws on labour-related matters, including minimum wage.

“So, anybody who wants to talk about minimum wage should go to the National Assembly or ask the President to send an Executive Bill which can be discussed and it will be a tripartite discussion, with the convening of a public hearing.

“Please, let a sleeping dog lie, because this country is going through a very difficult time now and requires your prayers and support. Nobody can reduce wages now. If anything, if you have more money, you pay higher.”

Then, one governor disagreed with his colleagues, perhaps because of his background as a thorough labour leader. Former president of the NLC and  former governor of Edo State and now National Chairman of the All Progressives Congress (APC), Adams Oshiomhole, said that his colleagues must pay the minimum wage, because “democracy cannot be run at the comfort and convenience of the governors.”

He had said then, “I am a labour man, I have been clear with my colleagues in seeking to find solution to the problem we face. We have to be holistic; we cannot at one hand question the wisdom behind the national minimum wage. I joined the NLC to protest to the National Assembly when they were going to amend the constitution to make the minimum wage a concurrent issue.

“I said workers have a stake in this democracy. They are the ones who could afford to march the streets and they march the streets for democracy. Democracy doesn’t have to run at the comfort or convenience of governors, ministers, and presidents.

“I believe that the issue in the economy hasn’t got to do with minimum wage. I have always also reminded my colleagues that the minimum wage was not imposed, it was negotiated and state governments agreed to it, the president signed it not under duress, there was no strike to compel the then president to sign it, he signed it voluntarily.

“I believe when you look at the minimum wage, as it is today at N18,000, it is less than 100 dollars. I think it is now about eighty dollars. Now, divide eighty dollars by 31 days, you will be getting about two point something dollars.

“Now we cannot argue that workers in Nigeria’s formal sector should not earn more than two dollars a day, I cannot subscribe to that because the heart of governance is the welfare of the people.”

Then, as the controversy rages, it is not all the states that obey the law in paying the minimum wage of N18,000. They have one way or the other found some ways round it such that workers are short changed.

But the controversy took a new turn when organised labour gave fillip to its threat to demand new minimum wage when it demanded for N56,000 as the new minimum wage, even in the face of the challenge of about 26 states owing salaries ranging from between two months and five months.

Speaking on the issue then, NLC Deputy President Comrade Peters Adeyemi, said that states that had refused to pay the N18,000 were acting against the laws of the land, adding that the NLC and the TUC will not fold their hands and watch those states act against the law.

He said the N18,000 minimum wage is no longer realistic as the collapse of the naira has made mincemeat of its value, adding:, “The naira has collapsed beyond the expectations of every Nigerian. I recall that when we negotiated the N18,000 minimum wage, the exchange rate then was about N90 to the dollar. As at this morning, it is about N360 and it is said to be stable.

“So, if you do arithmetical calculation, you will realize that it is more than 100 percent fall. What that means in effect is that the N18,000 itself has gone down beyond 100 percent from the time it was negotiated. What that mean is that what N18,000 can buy has reduced significantly.”

However, the prevailing minimum wages paid by the three tiers of government are grossly inadequate compared to the sustainable budgets for all the family income levels as well as the international benchmarks of the United Nations.

But, there has not been uniformity in the application of the minimum wage by the three-tiers of government in Nigeria, with each of the levels of government having a unique salary structure for its public servants. For example, while Enugu State pays a minimum wage of N18,500 to both state and local government workers, the Federal Government pays exactly N18,900.

Perhaps to bring to broader perspective, a comparative analysis of minimum wages in Organisation of Petroleum Exporting Countries, OPEC, to which Nigeria belongs, will suffice. Venezuela, with a population of 29 million, producing 2.340 million barrels of crude oil per day, sells petrol for equivalent of N3.61 per litre while paying N95,639 minimum wage to her workers; Kuwait pays the highest minimum wage of N161,461, among OPEC countries, to her workforce, produces the same quantity of crude per day with Venezuela and has a population of 3.5 million and sells petrol at N34.54 per litre.

Saudi Arabia with a population of 27 million, produces 9.8 million barrels of crude daily, sells petrol per litre at N25.12 and pays a minimum wage of N99,237; while Iran which has a population of 75 million, produces 3.7 million barrels of crude daily pays N86,585 as minima wage and sells petrol at N102.05. Qatar and the United Arab Emirates, UAE, pay N101,250 as minimum wage; they both have a population of 1.6 and 8.2 million, produce 810,000 and 2.5 million barrels of crude daily and sells fuel at N34.54 and N78.18 respectively.

Algeria, which has a population of 36 million, pays N55,957 as minimum wage, while producing 1.3 million barrels of crude per day and sells a litre of fuel at N63.55; Libya produces 1.6 million barrels of crude daily, sells a litre of fuel at N63.55 and pays N23,813 minimum wage to its workforce with a population of 5.6 million, while Iraq with a population of over 30 million people pays N25,813 as minimum wage while producing 1.4 million barrels of crude and sells petrol at N59.66.

Non-OPEC members like United States of America, USA, United Kingdom, UK, and Oman also pay higher minimum wage, compared to Nigeria. In the USA, the monthly minimum wage averages N197,296 while it is N295,644 in the UK and N91,583 in Oman.

Nigeria with a population of over 170 million produces 2.2 million barrels of crude and sell a litre of petrol at N145, up from the N87 inherited by the Muhammadu Buhari administration, pays her workforce a minimum wage of N18,000, which by today’s exchange rate is about $50, translating to average of less than $2 per day, for probably a man who has a wife and four children on the average.

This analysis showed that Nigeria pays the least minimum wage amongst her peers at the OPEC, despite that life in other OPEC member countries is more meaningful and worth living.

But is a demand for wage increase the best at this point in time? Analysts believe that what organised labour and leaders of the various sectors of the economy should do is to seriously engage government on how to arrest the dwindling economic fortunes of the country, and thus strengthen the naira.

This new demand from labour has however elicited various reactions from different segments of the society. But at the end of negotiations and horsetrading, the Federal Government proposed a N25,500 minimum wage while the state governors, proposed N22,500 minimum wage.

Organised Labour and the Federal Government outrightly rejected the governors’ proposal and warned to embark on what it called ‘mother of all strikes’ to press home its demand for a living wage.

The NLC subsequently advised Nigerians to stockpile food ahead of the strike.

Suffice to say that Nigerian has been confronted with endemic corruption which has for long been the bane of the nation’s development and it is noteworthy that bribery and corruption hold sway in any workplace environment, where workers are poorly compensated.

Most under-remunerated workers can easily be lured into bribery and corruption, especially against the backdrop that their take-home pay rarely takes them home and they need to survive, thus the tendency to seek ways of augmenting their earnings from their workplace by engaging in fraudulent acts such as pen robbery, embezzlement, misappropriation, pilferage and other kinds of corruption, become the order of the day.

To Steven Mintz, a professor in the Orfalea College of Business at Cal Poly San Luis Obispo in California, USA, workers deserve living wages.

He said, “I look at a living minimum wage as a moral issue. The Golden Rule says ‘treat others the way we wish to be treated.’ Who among us could survive on $10 per hour (which went into effect on January 1); $400 per week; and $20,800 per year?

“As I see it, the issue is one of greed and it has infected the corporate world for several years. It has translated into overly-small wage increases driven by the demand exceeds supply reality of the post-recession era.”

Reacting, the chairman, Movement For Nigeria’s Total Transformation, MNTT, Areoye Oyebola, Nigeria’s minimum wage, when compared to the wages in other OPEC members, is nothing to write home about. He said, “The figures are quite revealing and disheartening when compared to other OPEC countries,” adding that this explains why over 100 million Nigerians lives in destitution and misery and below the poverty line.

This perhaps succinctly put in perspective the plight of the Nigerian workers. While state governors and heads of corporations and multi-nationals live in opulence at the expense of the state and the corporations, the workers who are the engine room of government and business lived in abject penury.

The demand by organised labour is within the confines of the law which prescribed a period of five years for the review of national minimum wage. The present National Minimum Wage Act was signed into law in 2010 and labour has argued that the time is ripe for another review, which it them to make the new demand for N56,000.

But analysts opined that rather than dissipate energy on rationalising why the demand for a new minimum wage, state governments should direct their energy at championing the clamour for return to fiscal and true federalism, where the core areas where each state has comparative advantage in generating revenues should be returned to them and thus devolve power to the states and local governments.

Definitely, some states might find it difficult initially to find their feet, but the Federal Government and neighbouring states could come to the rescue of such states and sustain them pending when they will find their feet

The return to fiscal federalism will encourage healthy competition among the states, if what was witnessed in the First Republic is anything to go by, and boost inter-state relations, giving rise to several states coming together to execute projects that might, under normal circumstances, be too expensive for an individual state to execute.

For example, the South-West states can come together and resuscitate the Development Agenda for Western Nigeria, DAWN, where they can collaborate on mutual areas of interest and economic viability. The DAWN has been on the table since 2011, but its implementation has been sacrificed on the altar of political expediency.

For now, what Nigerian workers are looking forward to is upward review of the minimum wage, especially at the rate which global economy is fluctuating and life becoming more unbearable for the Nigerian worker.

One of the reasons for the existence of governments all over the world is ensuring the welfare of citizens. This much was reflected in the Nigerian 1999 constitution, as amended, in Section 14(b), which states that the security and welfare of the people shall be the primary purpose of government.

One of the way through which the issue of welfare is tackled is the legislation of a national minimum wage.

With the battle line drawn between organisad labour, which insisted on going on strike and the Federal Government’s policy of ‘no work, no pay’, the ordinary Nigerians on the streets, who are not in any way beneficiaries of the minimum wage are going to suffer more, especially, the millions who cannot feed unless they go out on daily basis to eke out a living.

While serving notice to embark on a nationwide strike, NLC, TUC and ULC presidents, Wabba, Kaigama and Ajaero respectively, in a joint statement lambasted the Federal Government for its decision to implement a ‘no work, no pay’ policy.

They said, “If nothing is responsibly done by the Federal Government to meet our demands, on Monday, November 6, we shall embark on a nationwide strike to compel this government to show more sensitivity to the plight of Nigerians and the suffering that is decimating our people on daily basis.”

Saying that the Federal Government rather than implement a ‘no pay, no work’ policy, should enforce a policy that would criminalise the non-payment of salaries.

The statement added, “A nation where the government owes its workforce several months in arrears of unpaid salaries has not sought ways to eliminate it but is rather seeking ways to gag same workers from protesting this crime against them and their families.

“It is akin to beating a child and denying him the right to cry. Has the government considered ‘No Pay, No Work’?’ Has it considered criminalising non-payment of workers’ salaries? Has it considered paying arrears of salaries with interests?

“Of course, it has not! They are only interested in ‘no work, no pay’ seeking ways to constantly gag and put workers in a straitjacket has always been their pastime.”

The unions said it was unfortunate that governors could kick against the N30,000 minimum wage, which the organized labour had reduced its N56,000 demand to, yet they are still soliciting for votes to return to office from workers.

“We shall consider any governor saying that he is unable to pay as unpatriotic and, an enemy of Nigerian workers and masses. We shall vote them out in 2019,” they said.

But many Nigerians may not support the forthcoming strike, as they say the organized labour had left undone what it ought to do to enable various levels of government pay the minimum wage.

In a vox pop carried out by LEADERSHIP, 70 per cent of participants in the poll argued that they would come out to join the organised labour if and when it comes out to lead protests: against the humongous salaries and allowances federal lawmakers are taking home monthly; for the reduction of the security vote and allowances state governors pay to themselves and for which no account is given; to request for part-time legislature, at both state and federal levels; to stop payment of pensions and stupendous gifts such as houses, cars etc, to politicians who served for just eight years in the office and pressured that civil service grade levels be applied to politicians in public office.

It is yet to be seen how much success will be achieved by the organized labour in its proposed strike, especially with the non-challant attitude of most of the populace to the issue of strikes in the country, especially against the backdrop of the allegation that labour leaders always use strikes to enrich their pockets at the expense of the masses.

However, with the state of the Nigerian economy, it will be disastrous to allow labour to embark on any strike, not even for a day. Therefore, government at all levels should proact to avert the forthcoming strike and reach a common ground with workers over the minimum wage conundrum.

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