Sunday, November 29, 2015

The N18,000 minimum wage brouhaha

Trouble is brewing between the state governors and the Nigerian labour un­ions over the former's attempt to stop paying N18,000 minimum wage to Nigerian workers. The hint was dropped on November 18, after a meeting of the Nigerian Governors Forum (NGF) at the Old Banquet Hall of the Presidential Villa. In a communiqué read by its chairman, Alhaji Abdulaziz Yari, also the Governor of Zamfara State, he stated that the dwindling prices of crude oil had drastical­ly affected federation allocation to the states. He said: "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 when 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".

Very good and rational argument. It is a notorious fact that Federal Government since last year declared austerity measures arising from the fall in international oil market. Na­ira has had to be devalued with the coun­try's currency now exchanging for over N200 to a $1. Indeed, experts say the manufactur­ing sector has slid into recession, while the oil sector remained weak. Various econom­ic indicators do not look good. Inflation is rising, likewise unemployment and concom­itantly poverty. Most private companies are engaging in staff rationalisation and even placed embargo on employment.
 
Many states have been unable to pay work­ers' salaries since the first quarter of 2015, while federal government had to arrange for bailout funds to assist the states pay salary arrears. In spite of that, many of the states have not been able to pay up to date, while pensioners' plight has been worsened. Giv­en the above gloomy pictures, will the gover­nors be correct to unilaterally renege to pay the N18,000 minimum wage? No.
 
The National Minimum Wage is an Act of Parliament signed into law by former Presi­dent Goodluck Jonathan in March 2011. This was after about two years of tripartite negoti­ation by government (represented by the fed­eral and state governments), the Nigeria Em­ployers Consultative Association (NECA), representing other employers (in the pri­vate sector) and organised Labour. Balking on the payment of the minimum wage will therefore be a breach of the Act.
 
Two, the minimum wage in question has become grossly inadequate to meet workers need. It's been implemented for five years and is due for upward review according to the Nigerian Labour Congress. Truth be told, N18,000 has become greatly undervalued by virtue of the hyper-inflation and curren­cy devaluation which have weakened the Na­ira. House rent has been increased by many property owners. Cost of transportation has increased due to fuel scarcity and high cost of vehicle spare parts thus hiking cost of main­tenance. School fees, access to healthcare, cost of foodstuffs, as well as cost of clothing have all become astronomic. Giving the high rate of unemployment, the dependency ra­tio on workers has tremendously increased.
 
What Nigerians now witness is high cost of living rather than high standard of living. It will therefore be uncharitable to increase the economic burden of workers by reduc­ing their paltry take home pay. Should this be done willy-nilly, it will affect staff produc­tivity as there would be no commitment to work. Another unintended consequence is high level of corruption and economic sab­otage as most workers will be finding ways and means to take undue advantage of their positions to defraud government.
 
Should government decide to further down-size staff strength as a way of reduc­ing wage bill, the upshot of that will be over­burdening of the retained staff as one staff may end up doing the job of more than one while salary and other emoluments remain same. Salary cut and retrenchment of staff are bound to also lead to labour unrest as their unions will definitely call for strikes.
 
What then is the way out of this alba­tross? This calls for thinking out of the box and doing business unusual. One veritable way of getting out of the financial quagmire is to block all leakages in the economy of the state. A look at many of the state's annual ap­propriation bill better known as budget will reveal that the statement is usually padded with all manner of wasteful and needless ex­penditure items. Every year, hundreds of ve­hicles are purchased while the one for last year are still serviceable. Same with comput­ers (hardware and software). There is also the huge overhead cost which is inclusive of en­tertainment allowance, wardrobe allowance, purchase of gift items for distribution dur­ing religious festivals such as Sallah (Rama­dan, Eid-el-Fitr and Eid-el-Kabir), Easter and Christmas celebrations. Is it not preposter­ous that the governors who are crying of low revenue base are still sponsoring pilgrims to Mecca and Jerusalem? Meanwhile the Nigeri­an Constitution has made it abundantly clear that there shall be no state religion and that Nigeria is a secular state. The sponsorship of pilgrimage is discriminatory against the ad­herents of African Indigenous Religion.
 
Other areas where government can cut down waste and block financial hemor­rhage is in the significant reduction of the ostentatious lifestyle of the governors them­selves and their lieutenants. Is it not iron­ic that the same governors who are lament­ing empty treasury have up to twenty cars in their convoys, fly chartered aircraft instead of joining the normal commercial flights and maintain multiple governor lodges in many states of the federation? Many state governors have done well by fishing out ghost workers through the biometric verification exercise of their respective workforce. This is com­mendable.
 
It is also imperative for the governors to stop award of contracts for white elephants. With the dwindling income, I will expect governors to do an audit of projects already awarded, percentage of their completion and whether such projects should be com­pleted or auctioned out to private buyer or investors.
 
Diversification of the state's revenue base has become inevitable. Am happy that the NGF has also flagged it as one of the options they are weighing. A lot of money could be made by state government from proper in­vestment in their state tourism potentials, agriculture, solid mineral extraction and sports. The best way to go about this is to bring in private investors under a mutually beneficial terms and conditions.