Nigeria's N30,000 new minimum wage: Matters arising

The fact that the maize is cooked is not enough to rejoice over; there is work to be done by both hands and mouth

— An African proverb

Last Thursday, April 18, 2019, President Muhammadu Buhari threw the labour community into a joyous mood by signing the new minimum wage of N30,000 into law. This is a political masterstroke by the President coming barely two weeks to the May 1 Workers’ Day celebration. The law had been due for review since 2016 but the President did not set up the tripartite committee to review the 2011 minimum wage agreement headed by a former Head of Service, Mrs. Ama Pepple, until November 27, 2017. The committee submitted its report to the President on November 6, 2018. On January 9, 2019, Buhari inaugurated the Bismark Rewane-led technical committee to help the government find ways of implementing the new national minimum wage without disrupting the nation’s development plans.

On January 22, 2019, the President took the report of the Ama Pepple committee to the National Council of State for approval. The day after, on January 23, he transmitted the National Minimum Wage Bill to the National Assembly. Six days after, acting with the speed of light, precisely on January 29, 2019, the House of Representatives passed the bill, a day after conducting its public hearing. The Senate however waited till after the 2019 general elections to pass the bill. It did so on March 19, 2019. The bill was then sent to the President for assent on April 2.

The President assented to the bill within 16 days. Thereafter, the Senior Special Assistant to the President on National Assembly Matters (Senate), Ita Enang, made public snippets of its content.  Enang, who briefed State House correspondents, said the new law had N30, 000 as minimum wage for Nigerian workers and its implementation starts immediately.  He said the signing of the bill into law now “makes it compulsory for all employers of labour in Nigeria to pay their workers the sum of N30,000.” However, the law states that employers with less than 25 workers are excluded from paying the new wage.

He said further that the workers of “a ship which sails out of the country and other persons who are in other kinds of regulated employment which are accepted by the Act” are also excluded from the new wage.  Enang said with the new law, workers now have the right to sue their employers who fail to pay them the new minimum wage.  And that the Act empowers the Minister for Labour or his representative to act in the case of such denial of the new wage.

For the country’s labour unions, it was a sweet victory at last. The Nigeria Labour Congress and the Trade Union Congress of Nigeria in separate statements commended the President for signing the bill into law. The NLC described the bill signing as only the first step and called for the immediate implementation of the law, given the fact that the process had dragged on for nearly two years. It advised employers, particularly federal and state governments, to commence immediate negotiations with the appropriate unions on the impact of the new law on the wage structure with a view to timely and judicious implementation. On its part, the TUC said the new wage would in no small measure give workers a sense of belonging. It said while organised labour appreciated the approval of the new wage, it was also instructive to note that its gains had been eroded by inflation, adding that prices of commodities had gone up even when employers had not commenced payment.

Yes, it was a long-drawn battle to get the current minimum wage. Recall that the state governors had never been in support of the N30,000 minimum wage. They were initially rooting for N22,500. Later, they agreed to N27, 000. In fact, the National Council of State was on the side of the governors when it met on Tuesday, January 22, 2019.  The Council approved a dual minimum wage. While it pegged the National Minimum wage at N27,000 for the least paid workers in the states and the private sector, it approved N30,00 minimum wage for Federal Government workers.

During the inauguration of the Rewane advisory committee, President Buhari made some instructive remarks in his speech. He said, “As you know, we, at the federal level, have made adequate provision for the increase in the Minimum Wage in our 2019 Budget proposals which we submitted to the National Assembly. Therefore, we will be able to meet the additional costs that will be incurred in moving up all personnel who are currently earning below the new minimum wage. However, we anticipate that after the new minimum wage has been passed into law, we will be going into negotiations for salary review for all the workers who are already earning above the new minimum wage. It is therefore important that we are properly prepared to meet these demands.”

To my own mind, the import of this statement is that some Federal Government workers who may currently be earning above the minimum wage may either not benefit from the new wage increase or may actually  have downward salary review.

Furthermore, the more challenging issue facing Nigerian labour will be how to convince the state governors to implement the new wage increase without having to lay off employees. As this increase is coming after the elections with many governors having served out their two terms, the incoming governors may not be too inclined to pay given their often used alibi of meeting empty treasuries.  Recall that in 2015, at the first meeting that President Buhari had with the governors, some of their requests were for the President to give them bailouts to be able to pay the backlog of the salary arrears they were owing their workers. Secondly, they demanded the review of revenue allocation formula in favour of the states.  Otherwise, they threatened to retrench workers. While President Buhari acceded to their request for bailouts and even shared out Paris Club refund largess to the states, many of the governors are still owing a backlog of salaries. This happened when the minimum wage was a paltry N18,000.

There have been fears expressed that the new minimum wage will cause inflation. I don’t think so. Whether or not there is a wage increase, inflation can occur. However, there is no gainsaying the fact that there will be increase in the cost of some goods and services such as food items, transport and accommodation.  Public servants and workers in the organised private sector who are primary beneficiaries of this new wage increase are just a fraction of the Nigerian labour force. Therefore, artisans, traders and people in the Small and Medium Enterprises will likely review the prices of their goods and service in order to benefit from the new wage increase.

Can the new minimum wage curb or reduce corruption, particularly among public servants? Not necessarily. People who have a penchant to be corrupt will still indulge in their pastimes irrespective of how much they earn. In my own estimation, the new minimum wage may not even improve the standard of living of the benefiting workers. Why, you may ask? It is because the value of naira in 2011 when the last review was made was more than what it is now. While the purchasing power of our currency then was higher, devaluation has weakened the value of naira in 2019. Hence, the cost of living is far higher now than it was eight years ago.

All the same, I hope all affected employers of labour will find the political will to pay and that the workers too will reciprocate the financial gesture with better and higher productivity. Lastly, I wish that the National Assembly will find it expedient to act promptly on various bills before it like it did on the 2019 new minimum wage bill.