Olusegun Oshinowo is the Director-General, Nigeria Employers Consultative Association (NECA), the umbrella body for employers in the organised private sector. In this interview with Ibrahim Apekhade Yusuf, the erstwhile African Vice President of the International Organisation of Employers (IOE) speaks on the dynamics of changing workplace policy, the recurring problem with the nation’s budget vis-à-vis the slow pace of the economic blueprint of the federal government, the raging debate over the national minimum wage amongst other issues. Excerpts:
YOU were part of the delegation to the International Labour Congress in Geneva recently. How will you assess Nigeria’s participation generally? What’s the takeaway for us?
The thing is that Nigeria has been participating in the ILO Congress for almost 60 years now. And as you well know, the ILO stands for social justice in the workplace. Because the ILO has come to the realisation that social justice if fully entrenched in the workplace would lead to significant productivity, and if the workplace is productive all round, that would have a positive impact on the growth of the economy of any country. In which case the ILO has come to the realisation that as important as human asset is in ensuring that the productivity wheel is ever moving, it is important for it to address its mind to the quality of the workplace so that the quality of the workplace which is expected to impact on the quality of human capital would ordinarily lead to improved productivity.
What we are trying to say in effect is that the ILO over the years, has concerned itself with various issues, diverse issues actually in the workplace, which are quite germane in positioning the worker to be in the right frame of mind to be very, very productive. And year in year out, the ILO will identify subject matter that could be the foundation for improvement of the workplace so that workers can have quality workplace and employers on account of the quality workplace can derive maximum output from the workers. I need not go into some key instruments which the ILO has articulated over the years to promote this issue of decent work and social justice in the workplace.
Most of them are rights-based instruments and what I mean by rights-based instrument is that by their enactment they have that conferred certain rights on the workers in the workplace. These are rights which will ensure that human dignity and workers dignity are given prime place in the workplace. So each time the ILO meets at its conference, the totality of the subject matter are being discussed most times is about improving the workplace in the expectation that an improved workplace will lead to increased productivity, and increased productivity will lead to an improved economy. And when you take 2018 as an example, you discover that one of the key subject matter on the table was the issue of harassment and violence in the workplace. And when we are talking of harassment and violence in the workplace, it’s not strictly from a gender perspective. Any worker, be they male or female, can be at the receiving end of harassment or violence, a victim of harassment or violence and any worker that is at the receiving end of violence cannot be expected to give his best to the employer. So the discussion this year on harassment and violence is along the line of an ILO considering an instrument from it.
So as you have said Nigeria stands to benefit from the ILO conference in many ways?
In any case, we’ve seen the positive impact of all those outcomes in some well developed economies of the world and our own economy cannot be different in trying to enjoy the full benefit of that comes from embracing those outcomes because there have been several outcomes over the years, some were domesticated, some were not. Some of the outcomes are not in form of what we call norms or standard instrument but they still have their role to play in trying to promote economic and social progress in the economy. So it’s left for us to look at the whole gamut of those outcomes, embrace them so that we can improve our society, we can grow our economy. That’s what this is all about.
The fear in some quarters is that the delay in passage of the 2018 budget would have some rippled negative effect on the economy, in terms of implication for businesses and all of that. Do you share the same sentiments?
Well, I think at any point in time as a nation the question we should ask ourselves is that what do we consider to be appropriate and decent? What do we consider to be reasonable in the way the economy of our country is managed? This is because the whole essence of the budgetary process is for you to plan for the future within a time frame. We’re not doing it just for the sake of doing it. We’re doing it because we want to have a resource plan in place that will enable us achieve some key objectives that are important to the welfare of our people.
If that is not the case we should add more option but to embrace the best practices to be doing that. What should be the best practice is articulating and implementing the budget of a country. The budget of every country has a timeframe. The best practice would be for such a budget to have been in place before the commencement of the cycle that the budget is supposed to be implemented. This is budget 2018. The cycle that this budget is supposed to address is January 2018 to December 2018. If you’re now finalising that process in June, it then means that there is something fundamentally wrong and which I will call inappropriateness in our budget planning cycle. So the starting point would be to resolve as a nation that we’re not going to be caught in the vicious cycle where the budget does not align with the period it is supposed to be implemented. That’s really important. And if you’re calling this budget 2018 to what extent will it be right for you to say it is budget 2018? Now six months of the period which the budget is supposed to address, it’s already passed and there is no way that would not have effect on your development. Because based on your constitution, there is no way you can spend from your resources beyond a certain percentage if that budget has not been passed into law by the National Assembly. So that would translate to what I will call a slowdown in progress for the country because we will not be getting the full effect of your budget because the law does not permit you to spend beyond a certain percentage if the budget has not been passed. So that is negative for the future and development of the country and got to change or break that vicious cycle.
Some schools of thought have argued that the delay in passing the budget may be counterproductive as there may be little or no development efforts given the fact that we are in an election year?
Again, I think there are quite a number of things we’re not getting right in this country. Why should the fact that we’re having an election affect the implementation of our budget? Why should it? Don’t we have structures in place? Don’t we have procedures in place that will ensure that the things that the budget is meant to address are addressed irrespective of whether we are going into an election or not? Remember, the budget as passed is linked to some activities and we have institutions on ground responsible for these activities. Why should the elections stop those institutions that are responsible for those activities from not delivering on their mandate? So the argument that it is an election year and it might affect the implementation of the budget is something that is not reasonable to some of us. I think the real issue is the failure of our government to pass the budget at the appropriate time. And the appropriate time should be before the commencement year of that budget. What is supposed to be spent in one year is probably going to be spending less than that in six months.
Because every activity equally has its own timeline of performance and there is no way they would want to rush the implementation that it will not affect that timeline. If you were to use the capital expenditure to implement certain activities, those activities will have duration and their duration might be within the context of the 12 months life cycle of the budget. If you’re now starting half year, it means that you’ll not be able to complete those activities by the end of the year and because you’ll not be able to complete those activities by the end of the year, it’ll not will be able to have the desirable impact on the economy within the period which it is meant for, which is 2018.
It’s almost a year the federal government marshalled out its economic blueprint in form of the Economic Recovery and Growth Plan (ERGP). It also followed that up with the Executive Orders on Ease of Doing Business amongst many other reforms like the Voluntary Asset and Income Declaration Scheme (VAIDS). However, in retrospect, not many people these measures have made much of an impact on the economy. Do you share such sentiments?
For me, you see, the issue simply borders on accountability. The government came up with the Economic Recovery and Growth Plan (ERGP) and within the confines of the ERGP are specific things that the government said it will do and if those things are done, government was quite clear about the outcomes of those activities. As a starting point, rather than leave it to the public or the stakeholders to speculate about what has been done or what has not been done, what a responsible government should do will be to come out on a yearly basis to say, a year ago, we came up with this plan, the purpose of which is to grow our economy and achieve items ABCDE. As of today, this is how far we have gone with the achievement and implementation of these plans. And then they take those activities one at a time and give feedback to Nigerians on what they’ve been able to do and the outcome of it. But those plans which they have not been able to do, they equally owe the public the explanation as to why they have not been able to do those things and when they’re going to do those things. I give you an example: as part of the ERGP, government had stated clearly that it’s going to sell some national assets. Now 12 months down the line, the government should be reporting to Nigerians how far it has gone in trying to sell those assets that they’ve identified. And if for any reason it has not been able to sell those assets, it owes Nigerians explanation as to why it has not been able sell them. I’m just giving that as an example. There are so many other specific things in the ERGP of government for which something has either been done or nothing has been done. But rather than government to come out to report to Nigerians on what they’ve been able to do, they’ve left it to the realm of speculation as to what has been done and what has not really been done. Then secondly, when you look at the ERGP in the context of an economy with high unemployment, there isn’t any specific focus on how the issue of unemployment will be addressed. If there has been, then they owe us that duty to report on what they have done in respect of that and how that has led to the reduction of the evil of unemployment that we are experiencing in this economy. There are so many other things for which they owe the public the responsibility. The ERGP is going to consume some resources from the government. Now how do we ensure that the resources that are being dissipated are utilised for the purpose of the ERGP will translate to employment benefit for Nigerians? Can anybody tell us in the part the entire spectrum of skills, competencies and number of workers that we need with relevant skills to support the implementation of our ERGP? In which case, if we have a developmental process that is not backed up by manpower plan, then there is a problem. What’s Nigeria’s manpower plan? If we don’t have any, how will our citizens be able to derive the benefits from implementation of our Economy Recovery and Growth Plan? So those are big issues that are asking for answers and for which the government is not connecting with the stakeholders of these big issues. But to wrap it up, I think the bigger issue is that of accountability. Every plan must be assessed on an ongoing basis for its implementation and its effectiveness because most plans, if not all plans will be clear on their outcomes. Neither have they come out and actually share with Nigerians the outcomes of the ERGP based on what government has state it would do.
One of the issues the organised private sector has always been bothered about is the issue of double taxation. Last year the government came up with VAIDS. But it does appears that all the policies about taxes have just been skirting around the issues as businesses are still complaining about multiple and double taxation as the case may be.
Now, it’s important to make what I call terminological clarification on the issue of taxes. First is the issue of multiple taxes as against double taxation. The two really do not mean the same thing. By the nature of our federal structure, our three-tier structure of local government, state government and federal government structure, there will always be multiple taxations because the constitution has recognised the right for each tiers of government to impose certain taxes. So to some extent that’s statutory. Multiple taxation is statutory because it’s been endorsed by the constitution. But where the problem actually lies is in double taxation, and this can be best illustrated by what I call duplication of taxes. So when we’re talking of double taxation, we’re talking of double taxation in the context of duplication of taxes in which case a tax that exist already at the federal level exactly the same type of tax is being replicated or duplicated at the state level. And I can give you an example of one which unfortunately has gained currency in the economy. Take the value added tax (VAT). VAT is a federal consumption tax. But what do we find now: you find a situation where several states of the federation have enacted their own laws imposing taxes also on consumption. But they are called names different from VAT. But in the real sense of it, what they’ve done is just to impose another tax at the state level. And that’s what we as businesses are concerned about. There is nothing we can do about multiple taxation; we’re bound to be caught up with it in view of our federal structure. But the real problem is double taxation or what I will call duplicated taxes. That’s what we really need to address our minds to because at the end of the day, it adds to the cost of doing business. It makes our destination investors-unfriendly. That’s the truth about it. And something has to be done about that.
Besides taxes, another issue businesses contend with is the problem of the worsening power situation. In other climes public private partnership has helped to drive infrastructural development even in key areas like power generation. A case in point is South Africa, where Staoil contributes about 5% to the national grid and gets some concessions in return. We have big businesses here too which have the capacity to drive socioeconomic growth. Why has the OPS not considered such steps?
Well, you see I think you’ve answered the question, and in asking the question you’ve equally recognised the fact that the issue of epileptic power supply has continued to dog our economy and has in fact been stifling enterprises and wealth creation. That’s the truth about it. And if we are able to get our hands round it, it will significantly jumpstart what I call phenomenal economic growth in Nigeria. There is no doubt about that. But the issue is why are we not getting it right? And when you look at the entire value chain of electricity supply from generation to transmission and distribution, the basic issue is that why are we not getting it right? And these are the issues that we really need to focus on in terms of options that are available for us. First of all to significantly increase power generation. The current megawatt of power generation as it is today for an economy the size of Nigeria is grossly inadequate. There is a consensus on that. An economy of our size cannot be relying on such a token, such a minimal megawatts generation of power. And the focus should be on, how can we wrap this up? What are the various sources we can use to wrap it up? You’ve given the example of South Africa. I have been privileged of visit a state in the United States, where they’ve tapped into solar energy and have vast acreage of land, where they have developed what I call solar farm. And here we have sunshine in abundance; that could be a source. So are we actually tapping the multiple sources that could wrap up our power generating capacity? We need to address our minds to that. And beyond generating the power, have we addressed our minds to the issue of how to evacuate the power that has been generated so that they can reach their various destinations whether it is households or factory. And that’s how the issue of our transmission capacity comes in. How effective and efficient is our transmission capacity? Because it’s one thing for you to be able to generate so much power but how do you evacuate it? Is the infrastructure on ground solid enough? Is it adequate enough to evacuate the significant power you are going to generate? I think that there should be a think tank and office, and I believe we have that in government that would be really addressing their minds to it and interacting with other stakeholders in the electricity sector to ensure that sooner than later and we are able to address this perennial problem of inadequate supply of electricity in our economy.
Recently you talked about a committee being put in place to address the issue of the national minimum wage. From interacting with some corporate bodies, they claim they are also waiting for the outcome of the committee report on the new national minimum wage before they announce a raise for their workers. Is this the norm?
That’s not entirely correct based on our own experience and the information available to us. In the private sector, there are actually three possible ways by which a worker can enjoy salary increase; one is through performance. At the end of the year the employer will review the performance of the employee. And based on the performance of the employee, the employer will grant a performance increase which also varies between 5-20 percent. And most well-organised businesses in the private sector have a performance management scheme on ground which ensures that on a yearly basis, their workers are remunerated base on their performance.
Then the second other source of possible salary increase is the collective bargaining machinery in the private sector and most industrial sectors of the private sector have that collective bargaining machinery through which either on a two yearly basis or three yearly basis, the employer will see the union to negotiate on what we call general salary increase. And the general salary increase that is granted could vary between 5-20 percent in some sectors. And this practice religiously takes place in most industrial sectors in Nigeria every two years or every three years.
The third source of possible salary increase for employees, is based on what we call the prerogative of the employer, where the employer will either grant general salary increase to his employees on account of inflation or cost of living index or on the basis of his survey which the employer must have conducted and which must have been indicated that employer is not competitive in the labour market and if it fails to review its salary that employer may find it difficult to retain his quality staff or attract quality staff. So, it will be wrong for anybody to say that private companies are waiting for the outcome of the national minimum wage implementation before they increase their salaries. Because any of these sources of possible salary increase which I’ve just mentioned to you, could take place irrespective of whether the national minimum wage is being reviewed or not because it’s been a practice that’s well established in those companies over the years. So that’s the point. The only difference truly, is that well, because the national minimum wage that is being discussed may not have impact in the private because some might just decided to delay any of those salaries increase which I have mentioned because of the imminent national new minimum wage which may or may not impact on the wage level of most private sector companies. Because remember what is being discussed is just national minimum wage; it’s the very minimum amount which an employer of labour in the country should pay. And you may as well discover that by the time the new rate is out, probably most employers in the private of the economy of labour in the private sector may have already been paying above the national minimum wage and there may not be cause for them to increase their salaries because they are already in compliance of the law.
So are saying that the OPS need not really wait for the national new minimum to increase workers wages?
Absolutely they don’t have to wait for the national minimum wage if they have an enshrined and institutional practice of wage increased based on the collective bargaining system or the company’s policy on wage administration.
