By Adedoyin Adebayo
The global adoption of the national minimum wage by the International Labour Organisation (ILO) has emerged as one of the strategies for safeguarding the dignity of labour. Regarded as a ‘living wage, governments of the world are setting a minimum standard for acceptable remuneration for the works of men. According to the ILO, minimum wage is “the lowest wage that an employer is allowed to pay the employee, the price floor below which workers may not be willing to sell their labour.” Whether or not this aim is achieved depends on diverse variables within the country. These variables include the prevailing cost of living, relative economic strength, per capita income, and productivity at a point in time.
Workers’ welfare is the responsibility of governments across the world through the fixing and regulation of the national minimum wage. About 90 percent of members of the International Labour Organisation have adopted the minimum wage to varying degrees; this highlights the importance of workers’ welfare and its relative effect on national economic growth and productivity.
Fixing minimum wage in most climes is coated with political flavour and the mere upward review of minimum wage will not mean a thing without the requisite enforcement and compliance to the new standard. The effect of non-compliance by employers both in the formal and informal sectors is not only prejudicial to the employees but also to employers that are in compliance by giving defaulting employers an unfair cost advantage.
The trend of minimum wage in Nigeria is not without its politics and challenges. From its inception in 1981, the minimum wage in Nigeria was fixed at N120 per month, reviewed upwards to N5,500 in 2001, and later in 2010 to N18, 000. The hyperinflation and the pressure from the Nigerian Labour Congress (NLC), Trade Union Congress (TUC), and other stakeholders within the sector resulted in the passage of the National Minimum Wage Act 2019. The act made an upward review of the national minimum wage from N18, 000 to N30, 000 to meet the demands of the time. At the moment, the National Minimum Wage in Nigeria stands at N30, 000.
Nigeria boasts diverse policies and laws, but these have been made ineffective by weak institutional capacity to ensure implementation and enforcement. The National Minimum Wage Act 2019 is not an exception. The law kicked off under an unfavorable circumstance, as the outbreak of COVID19 pandemic ushered in regressive economic consequences with a negative impact on labour, employment, and the implementation of the new national minimum wage in Nigeria.
The compliance question:
The posture of the government and its institutions plays a vital role in implementation and enforcement of laws or policies; the fate of the new Act rests on this fact. The Federal Government of Nigeria has implemented the Act to the extent of partial consequential adjustment for workers at some levels in the civil service. The extent of implementation at the state and local government levels is another factor that will influence the scorecard of compliance with the new minimum wage in Nigeria. There is no doubt that states in Nigeria have different financial strengths, but the responsibility for workers’ welfare rests on the government, and the posture of their respective state governments will set the pace for the due implementation in the private sector and informal sector of the economy.
The implementation burden lingers and the National Minimum Wage Act will be up for review in 2025. The politics preceding the Act should not succeed it and all hands must be on deck to ensure that all Nigerian workers covered by this Act enjoy the rights created thereunder.
Nigeria operates a simple minimum wage system whereby the operative minimum wage is fixed by the federal government after consultation and bargaining with the stakeholders including federating states who will bear the burden at the state level.
Section 12 of the Act provides that the Ministry of Labour and Employment and the National Salaries, Income and Wages Commission (NSIW) shall collaborate to ensure the implementation of this law. They are required to act swiftly on a report of non-compliance within 30 days of the receipt of such report.
The implementation and enforcement are to be done through the officers of the ministry in line with the extant rules of the NSIW Act and must commence within 6 months of enactment of the Act. We have witnessed paucity of implementation activities by these bodies and the politics that preceded the Act lingers as the echoes of ultimatums, strikes and boycotts by the National Labour Congress, Trade Union Congress and allied bodies to ensure the implementation of this Act is the order of the day. The hyperinflation experienced in Nigeria over the years has a negative effect on the welfare of the Nigerian workers, and the least the government can do is to ensure that the new national minimum wage is duly implemented and enforced.
There are indications that some state governments in Nigeria pay workers below the national minimum wage while others have suspended payment at some point. State governments of Taraba, Zamfara, Anambra, Ebonyi, Imo are not meeting the standard, and many other states are yet to make the consequential adjustments to all levels of workers.
The failure of the public sector to fully comply with this law will make the enforcement of the law in the private and informal sectors a herculean task. This situation leaves the workers and their trade unions helpless and with little resources to apply to enforce their rights. The usual strategy is to give ultimatums of planned strikes, strike actions and boycotts with little or no result at all.
Time is running out on the Minimum Wage Act and the bodies tasked with implementation responsibility must go beyond seeking the cooperation of employers of labour to open their books for inspection. An efficient intelligence gathering machinery must be put in place to track defaulting employers of labour in every sector and ensure compliance with the Act.
The public sector must prioritise the welfare of workers and investment in human capital development. This will provide leverage for putting the private sector in check. Moving labour and employment matters from the exclusive legislative list to concurrent legislative list will empower state governments to play a crucial role in matters concerning fixing and implementation of the national minimum wage. We have state governments that are capable of paying above the current minimum wage. States can be empowered to set their various standards that must not fall below the national minimum wage fixed by the Federal Government.
Other potent ways to ensuring overall compliance include:
• Enforcement of sanctions and penalties for non-compliance,
• Empowering Nigerian workers and trade unions on the procedure for lodging complaints and enforcement of their claims rather than regressive alternatives of strikes and boycotts.
• Coordinated and targeted inspection based on credible intelligence reports.
• Formalising the informal economy will expand the scope of the Act to workers like domestic staff who fall within the definition of an employee in the employee compensation Act.
• Public sensitisation and awareness campaigns will raise social consciousness about the national minimum wage.
Minimum wage cannot be an effective instrument of social protection without aggressive implementation and enforcement in the face of rising cost of living in Nigeria. There is no doubt that fixing an acceptable national minimum wage is not without a political twist but upon the enactment of the Act, the government must deliver on its primary function, of which the welfare of the people is an integral part. The public sector sets the pace and others follow.
The Ministry of Labour and the National Salaries, Income and Wages Commission must strategically carry out monitoring and compliance responsibilities as required by the Act. Until the foregoing is done, a new review of the Act will amount to a showroom exercise devoid of positive impact on the lives of Nigerian workers.