No one can doubt the critical importance of adequate wages for workers both in the private and public sectors for the optional functioning of any economy and the wellbeing of the majority of the people. Workers must be able to feed themselves and their families, afford appropriate healthcare, enjoy conducive shelter and means of transportation, private or public, among others to be maximally productive. Again, it is through reasonably adequate income that guarantees a minimally acceptable standard of living that workers and those who depend on them, a substantial proportion of the population, are able to buy commodities that, in turn, enables producers of goods and services to enjoy good patronage and make profit for reinvestment in further production.
This is why employers of labour in the private and public sectors of the economy are not doing workers a favour when they pay living wages as the resultant effective demand on the part of the latter is also crucial to having a vibrant and thriving economy as pointed out by Keynesian economists during the cyclical recessionary crises that are intrinsic to capitalism.
However, in arriving at an appropriate minimum wage that, as much as possible, reflects living costs, the requisite authorities are also understandably not unmindful of the implications of exorbitant workers’ incomes for high inflation rates that effectively erode a substantial proportion of the increased remuneration accruing to workers. At the height of Nigeria’s oil boom opulence, the General Yakubu Gowon administration, sometime in 1974, awarded the Udoji jumbo salary increase bonanza to Nigerian workers. That was understandable in an era when the country’s leadership asserted that the problem with Nigeria was not the availability of money but how to spend it. Excited beneficiaries of the Udoji salary awards stormed the supermarkets to buy up assorted electronics and other household items in the euphoria of the moment. It was not soon after, however, that inflationary spirals caught up with the new wages, diminishing their real value with long term deleterious consequences for the economy.
In the aftermath of the removal of the fuel subsidy as well as the merger of the parallel foreign exchange markets by the President Bola Ahmed Tinubu administration, reforms that it is generally agreed had become inevitable, cost of living particularly with regard to such essentials as food, drugs and general healthcare, transportation among others has escalated astronomically. Matters have not been helped by the removal of subsidy on electricity for a band of consumers even if that segment constitutes a minority of the population as argued by the requisite authorities.
There is thus a broad consensus that, given current existential realities, an upward adjustment of the extant national minimum wage of N30,000 has become inevitable. The tripartite stakeholders of government, supposedly at all levels, the organized private sector and labour as represented by the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) have no disagreement on this. The contentious issue is, what constitutes a realistic living wage?
Apparently because of the abrupt shock effects of the fuel subsidy removal on living costs and to demonstrate its sensitivity to the pains being borne by ordinary Nigerians, the Tinubu administration offered an immediate wage award of 35,000 Naira to federal government workers for an initial period of six months pending the determination of a new minimum wage, which the government promised would be a living wage. The implication was that added to the existing legal minimum wage of N30,000 and an earlier wage award of N12,000 given federal workers by the preceding President Muhammadu Buhari administration, this category of workers is going home with N77, 000 a month as rightly argued by eminent radical columnist, comrade Owei Lakemfa.
A number of state governments had offered differing wage awards to their workers ranging from N10,000 to N25,000. The Edo State governor, Mr. Godwin Obaseki, announced a minimum wage of N70,000 to his state’s workers saying the state would make necessary adjustments when an agreement is reached on the issue at the national level.
It is on the basis of the current minimum wage plus the wage awards that amounts to N77, 000 per month that labour insists that the federal government’s offer of N57,000 as at the last sitting of the tripartite committee is, in reality, a wage reduction.
It is also in the same light that labour perceives the offer of N54,000 by the private sector. But I think the point is that labour’s initial request for a minimum wage of N615,000 per month for the lowest paid worker, which it later reduced to N497,000, should have been strongly objected to as unrealistic ab initio by the government team and the organized private sector. It should not have been accepted as a meaningful starting point for any reasonable negotiation by other components of the tripartite committee. Had that been done, labour would most probably have scaled down its expectations and moderated its demands thereby making current stormy negotiations less intractable.
Labour argues that it arrived at its proposals based on a computation of how much, realistically, it would require for a family of six, a mother, father and four children to survive in a month on what is essentially a shoe string budget. It thus bases its demand on a conservative estimated cost of feeding, housing, healthcare and transport costs for the hypothetical family per month. But this is hardly a realistic way to proceed if labour is not bent on making negotiations impossible and industrial crisis inevitable.
Going by its logic, then a minimum wage of at least not less than N200,000 per month would have been insisted on by negotiators on behalf of labour rather than the N30,000 agreed upon at that time almost ten years ago. Who does not know that the N30,000 agreed on then could hardly take any worker home? But the labour unions discount the factor of the extended family as a social security network in our peculiar circumstances and the cushion it provides in augmenting the income of those who work in the formal sector through diverse devices. That is the only reason that explains why majority of people are able to continue to work at current wage levels despite excruciating living conditions.
But the critical factor is, what can employers of labour in the private and public sectors afford to pay without having to massively retrench workers or, in the case of private firms, close down operations completely thereby sending more workers into the unemployment market? As it is currently, many states are struggling to meet the extant minimum wage of N30,000. It is not surprising that governors who are expected to be members of the tripartite negotiating committee have reportedly not bothered to attend its meetings. Where do they begin negotiating from when labour makes N615,000 or N497,000 its starting point?
In the same vein, the private sector, particularly manufacturing with a high labour absorptive capacity, is functioning significantly sub-optimally due to inclement operating conditions. This accounts largely for the high rate of unemployment in the country as there is a limit to which the public sector can absorb surplus labour. To force an unrealistic minimum wage on the country would compel both the private and public sectors to retrench workers substantially while not guaranteeing the sustainable payment of the suggested new minimum wage to the remaining workforce.
Forced retrenchment will deepen overall poverty while worsening destructive social vices that have already assumed epidemic proportions. Meanwhile, spiraling inflation would have significantly eroded the value of the humongously enhanced wages. Again, a new minimum wage in Nigeria does not mean simply adjusting the pay of the least paid worker upward by the required margin.
Rather, as former Minister of Works and Housing, Mr. Babatunde Raji Fashola (SAN), aptly puts it in an essay in his book, ‘Nigerian Public Discourse’, “However, in other jurisdictions, the approach is to effectuate a modification in the minimum wage payable. Whereas, when Nigeria implements its own revisions, it affects everyone earning wages and salaries, leading to a consequential escalation to the most senior white- collar worker, thereby creating a fiscal challenge for the nation. This is the underlying reason why, even after the so-called minimum wage is increased, it is typically not disbursed. This is attributable to the fact that what has been executed is a base salary overhaul and augmentation of the minimum wage”.
BRF in his exhaustive discourse on minimum wage in the essay notes that “As we have seen, the word clearly used in Item 34 of the Exclusive Legislative List is “minimum wage”. It does not talk about salaries”. He then submits that “Furthermore, as it has also been shown, wages and salaries are different and should not be conflated. Therefore, efforts to improve minimum wage must be that and nothing more. It must not translate into a salary overhaul by accident. While cost of living challenges support the need for wages and salary increases, these revisions, in my view, must be delivered by different vehicles with clear parameters as to who will benefit from a wage review and those that should get a salary review”. I think the senior lawyer’s view must be of interest to those currently working on a review of aspects of the extant 1999 Constitution (as amended).
True, with the removal of fuel subsidy, more Naira revenues have accrued to the three tiers of government. But this should not necessarily mean recourse to an exorbitant salary award extravaganza a la the catastrophic Udoji awards earlier referred to. Rather than that undesirable and unproductive route, the federal and state governments must continue to invest surplus resources and innovate towards optimal electricity generation, provision of massive road and rail infrastructure, particularly rural-urban transport network, to create the requisite environment for businesses to flourish.
The private sector, especially micro, small and medium enterprises, are estimated to have a higher job generation capacity than the state sphere. Governments at all levels must also pump sufficient resources into boosting agricultural productivity to force down food prices through ample supply while also substantially reducing food imports, saving foreign exchange and enhancing the strength of the Naira. This will also entail investing even more resources to ensuring greater capacity to secure lives and property across the country so that thousands of displaced farming communities in the food basket zones can return to their farms.
But then, Labour is on point in its strong condemnation of evident continued waste in government at all levels and the provocative opulence of some appointed and elected officeholders. It is heartening that the Tinubu administration is not unaware of the imperative to ensure more efficient, prudent and transparency in the management of public resources as demonstrated by Mr. Wale Edun, Minister for Finance and Coordinating Minister of the Economy, in his speech at the recent opening of the Fourth Internal Auditors Retreat on “The role of internal auditors in public financial management reforms” which held in Abeokuta.
Edun stressed the need for an effective and efficient mechanism of administering public resources in the context of dwindling revenue profiles and resultant cash flow challenges. This has become more important not only to achieve more productivity in governance but also make the administration’s call for patience and sacrifices from Nigerians morally justifiable.
