Friday, July 15, 2011

Needless Fuss Over Minimum Wage

The current ruckus between the state governors and the Nigeria Labour Congress as well as Trade Union Congress over the payment of the N18,000 minimum wage to workers is needless, but not entirely unexpected. The governors under the auspices of the Nigeria Governors’ Forum have kicked against the payment of the new minimum wage which they say will ‘deplete’ their treasuries. They have argued that acceding to the workers’ demand will render them incapacitated to carry out any capital project. The governors gave two preconditions if they will meet the workers’ request: Review of the current revenue allocation formula in favour of the states and the removal of subsidy on petroleum products. On the part of the labour unions, they have served notice of a three-day nationwide warning strike to force the implementation of the minimum wage by the state governments.

It is however important to understand how the issue of the national minimum wage came about. Nigeria joined the league of International Labour Organisation member countries in 1981. ILO handles workers’ welfare. The last time a minimum wage was set before the current one was in 2000 with effect from May 1, 2001. Then, the wage was set at a paltry N5,500. It has taken 10 years to have this benchmark reviewed through a collective bargaining mechanism. Information gleaned from the website of the Nigeria Labour Congress has it that the union made a demand for wage increase in 2009 after a thorough study of the salaries of political office holders’ pre and post-consolidation, as well as a careful examination of the minimum annual wage levels in African countries. The study shows that the Nigerian worker is among the least remunerated in the world. In the NLC estimated cost of meeting basic needs for a representative family done in February 2009, a sum total of N58,500 was arrived at. NLC however decided to demand a new national minimum wage of N52,200 which the union considered approximate least Minimum Annual Wage Levels in African Countries, the minimum cost of providing basic needs for the worker and his/her immediate family.

In order to negotiate this request from NLC and TUC, the Federal Government set up a tripartite committee made up of representatives from the government, labour and the organised private sector. On the part of the government were four cabinet ministers, three state governors and a representative of the National Salaries, Incomes and Wages Commission. Labour drew its representatives from the NLC and TUC, while representatives of the organised private sector included the Nigeria Employers’ Consultative Association and Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture .The committee was chaired by the former Chief Justice of Nigeria, Justice Alfa Belgore (retd.).

Information has it that this committee met for over one year, negotiating with different stakeholders. It was reliably gathered that all the 36 state governors as well as the Nigeria Governors’ Forum were formally written to, to make input into the negotiation. While some of the governors were said to have recommended a minimum wage of about N20,000 and above, the committee decided to propose N18,000 in order to make it easy for all concerned employers of labour to implement. It was also proposed that the new wage would apply to only organisations with a minimum of 50 workers in its employment. It was after this agreement that the proposal was drafted into a bill and presented to the National Assembly. This bill was passed and signed into law by President Goodluck Jonathan on March 23, 2011.

Given this background information, should there be any controversy about implementation of the National Minimum Wage Act 2010? Needless, you would say. But by virtue of the fact that those who endorsed it are politicians, it is then not totally unexpected that they are now playing politics with the Act. No matter the amount of intrigues and double-speak by the federal, state or local government executives, the N18,000 national minimum wage must be paid. It is a law backed by the Act of Parliament and the 1999 Constitution of the Federal Republic of Nigeria. Governors that are new in the saddle must realise that government is a continuum and when they get elected into office, they inherit both the assets and liabilities of the state.

Moreover, what is the worth of N18, 000 in today’s Nigeria, given the cost of living, the inflationary trend and the dependency ratio of an average worker? Due to the monetisation policy of the Federal Government, my understanding is that this N18, 000 is the total monthly emolument of the concerned workers without any other allowances, be it housing, health or transport. The paltry sum is also taxable for the personal income tax. It is worth noting that this national minimum wage is more beneficial to the workers on the lower rung of ladder particularly Grade Levels 01 – 06 as a sliding scale is applied to the wage structure across board.

Considering the fact that our political office holders are paid large sums of money as salaries and allowances, it is very heart-rending that the pittance that is due to public servants is being denied them. One of the creative ways the governors can mobilise resources to pay this wage increase is to slash their security votes by two-thirds as well as reduce the allowances of the political office holders in the states. Other ways include tackling the monster of corruption in their various states; reduction in the number of aides to persons in executive positions; diversification of the revenue base of the government (this will lead to significant increase in the internally generated revenue of the government); enhancing the enabling environment for the private sector to thrive (this will bring about foreign direct investment which will reduce the spate of unemployment and lessen the dependency ratio of workers). I agree with the governors on the need for better fiscal federalism.

I say yes to the call for the review of revenue allocation formula in favour of the state and local governments. Some of the items on the Exclusive Legislative list in the Second Schedule of the Constitution also need not be there. There is absolutely no justification for Item 34 on the list which deals with labour and industrial matters including fixing of minimum wages. States ought to be allowed to determine the remuneration of their employees on the basis of capability. However, that is in the long term as it will need legislation.

Performance-based governance is needful. Wages should be earned, based on productivity and should not be mere bonus. As for the labour unions that are poised to go on strike, they should reconsider this approach as the economy can ill-afford the dislocation and destabilisation this will engender. A better option is for the unions to sue the concerned government, be it federal, state or local to the National Industrial Court which is a court of superior record to adjudicate on.