Nigeria Employers Consultative Association (NECA) Director-General Mr Timothy Olawale, in this interview with Correspondent TOBA AGBOOLA, urges employers to pay the N30,000 minimum wage. He implores the government to look into multiple taxation and other issues affecting businesses.
Why is the Nigeria Employers Consultative Association (NECA) in support of the new minimum wage?
We stuck out our neck on the new minimum wage because it came out as a result of a process in which we are actively involved. We are actively part of the discussion, decision and we agree and believe in the discussion of the Tripartite Committee. The second reason is that when you think about the welfare of workers, we believe N30,000 is ideal and that anything below that is inappropriate. Employers have the responsibility of taking care of their employees before they can increase productivity. You are not making life meaningful for them if you don’t pay them good salary.
Can you say that N30,000 is enough for workers with the situation in the economy?
The question we should ask ourselves is how far will the N30,000 go in taking care of a worker and his or her entire family. By the time a worker go to and fro from his/ her working place everyday, that N30,000 would have been substantially depleted. Don’t forget that there is also other basic needs like shelter, feeding, medicals, education for the children. So, when you benchmark all those with the said amount, it can’t go far. And I want to say that anything below that is criminal.
Some of the governors are saying N30,000 is enough. How many of the politicians who have Alsatian dogs can maintain them with N30,000 per month? I asked one at a committee meeting if N50,000 could feed his dog a month. He laughed and backslapped me, saying ‘O boy, let’s leave that one. I am not talking as myself. I am talking as a government representative.’ Another governor said he paid more than N30,000 to his domestic employee. So, if you are convinced that they deserved that, so that they will not steal from you, why not do that at the national level? You are talking about fighting corruption when you don’t address fundamental issues, such as what can sustain people. How, then, can you talk of fighting corruption when you are creating hunger in people and you are saying they should not look for any other way to sustain themselves? They should not do anything outside their official job or steal. I am not condoling stealing, but you are exposing them to temptation.
Generally speaking, what do you think is going to be the effect of this N30,000?
Yes, there is going to be a consequential effect, but it is going to be minimal and it is going to be controlled. One of the effects is that there is insufficient enlightenment to the public to let them know that the fact that there is new minimum wage, does not mean that everywhere will be awash with money. Because based on that belief, there will be a jerk up in the prices of goods and services. Everyone, both market women and men, will want to benefit directly from the new minimum wage. And when those happen, the effect is that workers welfare will be lost. What it means is that the new minimum wage will not have any positive effect on the workers. One of the disadvantages of this is the prolonged process in arriving at the new minimum wage. Because everybody who doesn’t even know what minimum wage is all about before is aware now and is anticipating for when it will take effect so that they can also benefit. It is so unfortunate, but that is a Nigerian for you.
How are you sure that members of the organised private sector will pay the minimum wage?
There is no reason members of the organised private sector should not pay N30,000 minimum wage. This is because they (Organise Private sector) agreed after due consultation. So, we are saying authoritatively that all members of the organised private sector will implement N30,000.
NACCIMA once said it is not in support of the minimum wage. What is your take on this?
On the unfortunate response from the representative of NACCIMA, the person did not speak on behalf of NACCIMA as a body. The position has since been denied by the body she represented. They said that they never sent her. The speaker said she was on her own and that she was never sent. And for her to have said that, it is only her that can explain. They also said that the position of the Organised Sector is okay by them and that they are in line with it.
How will the N30,000 minimum wage affect NECA members?
The simple truth is that 70 per cent of the organised labour is paying way above N30,000 as minimum wage. So, the consequential impact is very minimal, if not nil, because it is supposed to affect the chain or review, where your benchmark is below N30,000. So, if you are paying way above N30,000, you need not bother, except if you want to enter what we call a ‘sweetheart agreement’ with your workers and you decide to raise their salaries. As we speak, some sectors have started negotiating without waiting for the government’s decision on the N30,000 proposal. My concern, however, is the informal sector – the Small and Medium-scale Enterprises – which are struggling and don’t have enough support from the government and its agencies to survive. The question is: are they well positioned to absorb the effect of N30,000? Can they implement it? We have encouraged them to embrace the plan of relevant bodies like the International Labour Organisation, which NECA is a part of, to help them transit from informal to formal sector. This will help their businesses and deepen their access to capital.
Also, they need to engage their workers because the major problem that has reflected in the rate of unemployment is that what Nigerians are even looking for is to leave their houses and have a means of survival in the first instance. Majority of our teeming population are out of jobs. Abraham Maslow’s hierarchy of needs talks about subsistence level. In other words, the physiological need is: ‘Let me even have somewhere to go and have something to sustain myself and my family.’ It is after meeting that need that you start thinking of how to improve on it and, then, maybe the issue of minimum wage will arise. Our focus – and what we have always told the government – is for us to have a situation where majority are gainfully employed in the first instance.
Then, we can talk about improving on it. We have also advised the SMEs to broaden their scope so that more people can get into the employment net through their activities. Then, you can bother about the issue of minimum wage. It also came up in our discussion at the National Minimum Wage Tripartite Committee, I mean the issue of enforcement. Because it is one thing to have a law, it is another to enforce it.
How is the organised sector faring under the economy?
We have to start by commending the government for doing everything possible to make businesses thrive. Specifically, we commend the Office of the Vice President for the efforts to ensure that we have a favourable economic environment to operate. Having said all these, there are instances whereby some agencies of the government have not keyed into the good work the government is doing. Some of them are not in line with the vision of the government in ensuring that there is ease of doing business. But the good news is that while the leadership of those agencies are mounting their onslaught on business through regulating of business outside the rule of law(because we are not against regulation), the government has been very responsive in calling them to order anytime we raise an issue with them, which is also commendable. In time past, we complained, raised issues, but nobody listened to us. So, we commend this government for listening to us when some were issues raised. When you have an avenue or window to complain about the situations of things, I think it’s a wonderful thing.
How do you rate the government in terms of economic policy and job creation?
We think that the government should look at the policies on the banking sector. Banks are not playing their role in ensuring that those small businesses thrive. Banks will rather lend money to the government or big business where they know the returns will be big. We commend the initiatives of this government. It has tried to create jobs, like the N-Power and TraderMoni. But I dare say that what they are doing is just a scratch on the surface of the epidemic that has confronted our nation and that scourge is massive youth unemployment. That is why many of them are ready-made tools in the hands of Boko Haram because there are many frustrated youths that are just roaming about in the North. Just a little inducement and they are ready to cause unrest. That is why in the course of all these political activities, you also have ready-made thugs; many idle hands out there. You give them N1,000 and they go to the bus stops to drink alcohol and they are ready to cause mayhem.Unfortunately, that is the situation we have found ourselves and that is why you see the police parade graduates who are involved in kidnapping and terrorism-related activities. In those days, even before you finish your course in the university, industries and government agencies would be begging you to work for them. But this is where we have found ourselves.
Although this problem cannot be blamed on this government, when you agree to serve, you have agreed to solve problems; not to start casting aspersions on the past government. You have been called to serve and solve problems, notwithstanding the creator of the problem. They have tried, but their attempts are not good enough. They have created jobs, but they are not the jobs that can endure.
The debt burden keeps rising. Don’t you see this as dangerous for the economy?
Figures released by the Debt Management Office (DMO) showed that the Federal Government’s domestic debt profile rose to N15.814 trillion in September 2018 from N15.629 trillion in June 2018. That is 1.19 per cent increase. This figure becomes more worrisome when we look at the total public debt stock, comprising external and domestic debts of the FGN, the 36 states and the FCT hitting $73.208 billion (N22.38 trillion) recorded in June 2018. This trend, which is very disturbing, could have a negative effect on the developmental capacity of Nigeria, despite the government’s financial managers’ argument that the rate of increase is within a manageable limit. Financial experts at the International Monetary Fund (IMF), and the World Bank have, in fact, advised that the revenue-to-debt ratio is unsustainable and it portends a serious danger for the future generation. While the effect of the increasing debt may not be immediate, it could be catastrophic in the long term with a chunk of revenue consumed by debt servicing to the detriment of infrastructural development.
This, sadly, is the reality as N2.140 trillion from the N8.8 trillion proposed 2019 budget, has been earmarked for debt servicing, representing about 25 per cent of the total budget allocation. The size of government borrowing in the domestic financial market also continues to be a major source of concern as this has in no small measure, affected the chances of the real sector to access funding at a reasonable cost.
If you cannot leave a credit legacy for the future generation, at least you should not put them in bondage by putting a chain of debt around their neck which will strangulate them.
What will you suggest as the way out of this debt predicament?
The federal and state governments, as a matter of urgency, must take deliberate steps aimed at cutting the cost of governance and recurrent expenditure. The government also needs to start paying serious attention to workable investment schemes, collaborating strongly with the private sector, which is the engine room for economic growth. The government has to recognise the important role of the private sector in building a robust economy, as oil revenue alone is not enough to place the country on the path of sustainable development. The government must, therefore, make commitment to facilitate a favourable environment with policies that will attract private investors.
What is your take on the 2019 budget?
The budget was benchmarked against $60 per barrel of oil at 2.3 million barrels per day, an exchange rate of N305 to $1, an inflation rate of 9.98 per cent and a GDP growth rate of 3.01 per cent. These assumptions negate the reality of oil price volatility. Oil industry experts had rightly warned that the political dynamics of the Middle East might drive down the price of crude. True to prediction, a barrel of crude today sells for less than the benchmarked price of $60bpd. Also, it is yet unknown how government will increase our present 2.09mbpd crude production to 2.3mbpd in 2019 with recent challenges at the Niger Delta and OPEC’s resolution on cut in oil production pegging Nigeria’s daily output at 1.7mbpd.
A cursory look at budgetary allocation to some critical sectors raises some germane questions about our readiness, as a nation to address certain fundamental questions. Human capital development has been noted as critical to a nation’s development. It is, therefore, worrisome that education was allocated N462.24 billion, which is less than six percent of the entire budget.This is a far cry from the UNESCO’s benchmark of 26 per cent of the national budget. A healthy nation is said to be a prosperous nation. The N315.62 billion, which represents a meagre 4.1 percent of the budget, tends to negate this mantra. This allocation also contrasts the pledge made by member-countries of African Union (AU) to commit a minimum of 15 percent of their yearly budget to their health sector.
What is your take on multiple taxation?
There is no doubt that multiple taxation is killing businesses in the country. Businesses in Nigeria are encumbered with the payment of over 55 different taxes at the three levels of government. The incidence of double taxation, particularly consumption tax, has assumed a very dangerous dimension. We expect the government to rein in through an appropriate statutory or policy declaration. The government should not make mistakes of generating revenue through tax increase. We know that the government will want to meet up with its revenue requirement. If you increase tax, it will increase cost of goods and services and it is the consumers that will suffer for it. You don’t make people poorer by adding to their burden. So, the government must be very careful when it says that it want to generate more revenue internally. Rather than increase the tax, I think what government should do is to widen the tax gap between the rich and the poor or average Nigerian. Some companies and well-to- do individual are not paying tax. The government should also focus on luxury goods, most especially foreign goods that we can do away with. But the government should those goods that has direct effect on the common man.
Do you think the Economic Growth and Recovery Plan (ERGP) is recording expected success?
It is a laudable programme and we have repeatedly said so. With steady implementation, it is going well. However, sustainability and persistency in the implementation is what is important. The government should be consistent and sustain the steam at which it is implementing it. There should not be a relapse and gradually we will get out of the woods.
Can firms actually survive in this challenging environment? What can the government do to provide enabling environment for businesses?
It is indeed very challenging and troubling not only because of our deficit in infrastructure, but also because of some other human element that is also compounding the matter especially regulatory onslaught on organised businesses.
Regulators are supposed to be service platform to nurture businesses and guide them into compliance and organised businesses are not against such regulations. However, rather than been collaborative and supportive what you discover is that most of these regulatory agencies are pecuniary-driven.
They are also not operating within the ambit of law and that is why you see instances where arbitrariness, without recourse to the provisions of the enabling acts setting up those regulatory bodies, they shut down businesses and cause damages that are difficult to mitigate on businesses. And this counters the government’s enthusiasm in improving Nigeria ranking in the ease of doing business.
We have repeatedly said the government cannot be working on the ease of doing business in one hand and some other agencies of government are working to pull it down. However, good enough, the government has instituted a platform for us to continuously engage with them on a quarterly basis. We will continue to review situation with them and to see how government can call to order the leadership of those agencies.
What are your plans for NECA?
NECA’s mandate revolves around just one principle and that is ‘service to members’. You are as relevant as a business membership organisation as much as you continue to serve your members and deliver to them on those mandates that they have committed into your hands. That is what NECA has been doing since 1957 and building upon and that is what we will continue to do.
Deepening our service portfolio to members, enriching that portfolio and improving on what we have been delivering to them so that we will sustain our relevance. In specific terms, these are services that are connected with the competitiveness of business and sustainability of those services. It is one thing for businesses to be competitive in short time and another thing for the business to be sustainable in the long time.
The other aspect is that in driving that, NECA’s core value of being a responsible corporate entity, by doing whatever it wants to achieve through legal and legitimate means, it would be sustained. In other words, we are not going to vie outside legality and legitimacy.
Finally, we have good financial standing for the organisation. We didn’t inherit an organisation that is bankrupt and we do not intend to go that route. We make sure the organisation continue to be on a sound and steady footing through the period of my service at the highest level.
One of the hallmarks of your predecessor was women empowerment. What does your administration have for young entrepreneurs?
We have just started a project we tagged ‘NECApreneur’. It is an online solution to reach out to young graduates and that are still in tertiary institutions to imbibe in them the traits of entrepreneur. You are aware that the scourge of unemployment is huge and the only way out is to dissuade youths from chasing white-collar jobs. Instead, they can be entrepreneurs and even be employers in their own little right. The initiative is done online and divided into three segments.
We have the foundation, intermediate and advance levels. We also give them the opportunity of internship for them to understand the practical aspect of it leveraging our membership network. We believe they should be in good standing to start their business. We are also into technical skills development where eventually by the time they pass through the tutelage of those training institutions or companies. They will be in a position to start their own businesses based on the skills they have acquired.
With these two interventions, we will actually go a long way in taking care of the youths and the upcoming young executives. With regards to the women employment, it is an on-going initiative. We can only continue to deepen and build on what we have achieved so far. It is still work in progress. It is not as if it is done and dusted. If you don’t continue to nurture and grow it, there is a possibility that it will die.
