While Nigerians desperately seek succour following the asphyxiating socioeconomic situation prevalent across the country, the authorities and the organised labour are locked in a hide and seek over the appropriate amount that should constitute a new minimum wage, writes KUNLE ODEREMI.
Defaulting states on N30,000 minimum wage
Five years after the proclamation of the current national minimum wage, at least 15 states are still defaulting on the payment to workers. Labour has not succeeded in its occasional standoffs with governments to comply with the act that brought about the minimum wage in 2019, whereas the law states unambiguously stiff sanctions against any act of infractions of the provisions of the law. Ironically, some of the states had embarked on populating the workforce of their states through fresh appointments and recruitments, which, the civil society organisation called BudgiT says has shot up cumulative personnel cost of the 15 affected states by 13.44 per cent to N1.75tn in 2022 from N1.54tn in 2021. It added that those states grew their overhead bills by 23.42 per cent to N1.24tn in 2022.
At different times and forums, labour had frowned at and remonstrated against the utter disregard by those states for the law on the minimum wage. Wabba, who is a former NLC president, had asked workers in the affected states to engage in actions compatible with labour law to register their protest against the authorities for undermining their rights. He opined that it is “disheartening” that amid the current economic situation, some states “still need persuasion” to pay workers the national minimum wage.
Federal allocation formula
There is the perennial issue concerning the federal allocation formula, which is skewed against states and local governments. The belief is that it is against the fundamentals of federal principles. The issue has, for the umpteenth time, brought forward by governors in the raging debate and discourse for a new minimum wage. Under the existing system, the Federal Government gets 52.68 percent; states 26.72 percent and local governments 20.60 percent of the federal allocation.
The governors have made a fresh demand for a review of the revenue allocation formula to enable them to implement the proposed national minimum wage. Governors Ademola Adeleke (Osun), Bala Mohammed (Bauchi), Caleb Mutfwang (Plateau), AbdulRahman AbdulRazaq (Kwara), and Mohammed Bago of Niger State, spoke on the resolve of the governors at the zonal public hearing on the national minimum wage. They insisted that the current revenue allocation must be reviewed in favour of states to empower them to meet the workers’ expectations. The public hearing came amidst the call by workers at meetings held simultaneously in Lagos, Kano, Enugu, Akwa Ibom, Adamawa and Abuja for various figures as a living wage due to the current economic hardship and hyperinflation in the country. The public hearing was meant to receive stakeholders’ inputs which will be considered by the 37-member Tripartite Committee on the New National Minimum Wage set up by President Tinubu in January. The position of the South-West governors was delivered at the public hearing in Lagos. The Minister of Finance and Coordinating Minister of Economy, Mr Wale Edun, presided. A member of the Tripartite Committee, Adeleke, called for an urgent review of the revenue-sharing formula to favour the state and local governments. He urged the Federal Government to move the control of solid minerals from the Exclusive Legislative List to the Concurrent Legislative List and that states should be allowed to negotiate with their workers’ pay. He declared: “It has to be reiterated that the majority of the government at the sub-nationals can’t sustain and improve wages and salaries for their workers without a significant adjustment in some of the narratives in the national economy….I call on the National Assembly through the Revenue Mobilization Allocation and Fiscal Commission to urgently take decisive action to look at the ratio objectively and realistically.” His Bauchi counterpart reiterated the call for the review of the current sharing formula, because, the “majority of the Nigerian people live in the states.”
How much is appropriate?
However, the opinion of a few individuals that differ with the labour over the agitation for minimum wage is based on the amount being demanded to replace the current N30, 000 minimum wages. They want labour to be more realistic in the demand. For instance, a former NLC president and now the senator representing Edo North, Adams Oshiomhole, has said state governors can no longer cite low revenue as an excuse for withholding payment of a new minimum wage to their workers. Oshiomhole said this is based on improved federal allocation payments to their coffers. Oshiomhole said that all concerned parties acknowledged that the current minimum wage of N30,000 is outdated and should be increased to meet with rising cost of living. He canvassed for a mutual agreement between workers and the Federal Government and the state counterparts that there is an urgent need to increase the minimum wage. According to him, “I think there is some agreement between employers, including private employers and obviously the Federal Government, and I believe state governments that the current minimum wage of N30, 000 is a joke.” But the former Edo governor said governors purchasing cars at current prices had reason for failing to implement the new wage upon approval. He added: “Those governors are buying cars at the current price. They don’t pity them because revenue is low. The truth of the matter is that we have to speak the language of the market. Those forces that drive prices also drive the cost of living. There is a recognition of the fact that the purchasing power of the workers across the board including directors, permanent secretaries not to talk of those on levels one to four, has dropped radically and you need to beef it up and put food on the table for families. In a market economy, there are even countries where wages are indexed to the weight of inflation. So, I think there is a shared commitment that wages should go up and go up radically as much as prices have skyrocketed. All employers, including the private sector, should increase their wages as they are charging higher prices.”
Governor Sule Abdullahi of Nasarawa State, who also agreed that workers deserve better pay given the current inflation statistics, explained that all sub-national now receive more allocations and can pay a little more than what is currently paid. He said: “No state in the federation can say we have not seen improved revenue that has come to us and I think every state is proving it by the number of so many infrastructure developments and other kinds of development that are taking place.”
Balancing act
Critics of the increase say wages are a factor in the overall welfare package for workers. They suggest that the government should consider other components of the welfare of all Nigerians, because the whole matter borders on the weak purchasing power of the Nigerian currency (Naira). Others called for a positive shift in the lifestyle of the political leadership to reflect the demand and needs of the larger society. The critics say profligacy seems to have subsumed the culture of service, commitment and transparency and accountability among those privileged to lead at federal and state levels in particular. “Besides, the productive sector must be revamped in order to reduce the current huge importation of goods and services that can be sourced locally. In this regard, the further diversification of the economy, with emphasis on where the country has a comparative advantage should be of utmost priority,” a historian, Mr Bayo Omiwole, stressed. “These and other measures should be precursors to a sustainable wage structure that would be vulnerable to the whims and caprices of political gladiators.”
Impact
Whatever the outcome of the ongoing negotiations will affect all the citizens and influence the private sector and state government workers. The public sector will face the challenge of implementing a wage that supports workers without causing undue strain on the nation’s budget. So, there is a need for a wage that tackles the rising cost of living and tries to strike a balance with inflation and checkmates job losses. A corresponding increase in production is vital, as Professor Tayo Bello, a lecturer at Adeleke University, counseled that, “The downside is that this wage increase might exacerbate inflationary pressures. As businesses face higher labour costs, they may pass on these expenses to consumers through increased prices for goods and services. This, in turn, could create a feedback loop, with rising wages fueling further inflation.” A financial economist at Ebonyi State University, Dr Nelson Nkwo, suggested that the government should introduce more measures capable of cushioning the domino impacts of wage increase. He said the measures could include a stricter monetary policy to check inflation and specific support programmes for businesses. “Policymakers must carefully consider the broader economic implications and adopt a comprehensive approach to ensure a harmonious and stable economic environment,” he said. Other experts suggested that governments should invest more in those sectors of the economy that can create jobs that gear up production of more goods and services at affordable costs. Besides, they advocated that the authorities should engage the services of professional managers to manage the nation’s fiscal and monetary policies in order to maintain economic stability, as well as improving the infrastructural facilities in the government-owned schools, hospitals, providing good road networks, quality and affordable water, power, foodstuffs, housing, and security of lives and properties.
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