Minimum Wage: Why Nigerians Mistrust The Organized Labour

Minimum Wage: Why Nigerians Mistrust The Organized Labour

The indifference and apathy that greeted the warning strike called by the organized labour, the trade unions comprising the Nigerian Labour Congress (NLC), the Trade Union Congress (TUC) and the United Labour Congress (ULC), on Thursday, September 27, 2018, in order to press home their demands for an upward review of the national minimum wage from N18,000 to N56,000, was supposed to be a harbinger of how events will later unfold for labour in Nigeria.

The warning strike did not last up to the week it was meant to last before it was called off, partly because of the determination of the Federal Government (FG) to bring a speedy resolution to the issue and also due to the lukewarm attitude of the populace towards adhering to the industrial action.

Before the splintering of the Nigeria Labour Congress (NLC) into different factions, the group has always had a chequered history with the Federal Government while Nigerians have always been circumspect of the true intentions of the labour leaders.

ISSUES BEDEVILLING THE POLITY

Any attempt to analyse the problems facing Nigeria may require volumes of books with practically every facet of the economy in a derelict and moribund state due to neglect over the years by successive governments which is why most Nigerians are not enamoured about the prospect of another industrial action when there are more pressing issues to be tackled.

The power sector, in particular, has been the cause of migraines over the years due to what seems to be an unresolvable problem for the problem.

The recent privatization of the sector has yet to yield any panacea to the problem with many Nigerians of the opinion this is the type of fight that should be championed by the organized labour.

From inflated power bills to the refusal of the distribution companies (DISCOS) to ensure the widespread installation of pre-paid meters, Nigerians should be forgiven if they don’t share the same ire towards the FG as the organized labour.

The education sector seems to be set up to ensure the gradual degradation of knowledge amongst the “leaders of tomorrow” with the nonchalance of the FG towards revamping the sector with the aim of putting the country amongst the comity of forward-thinking countries.

I remembered joking with a friend a couple of weeks back on whether we even have a Minister of Education; such is the rot and neglect riddled in that sector.

The issue of the humongous salaries and allowances drawn by the lawmakers is also an area the organized labour should seek a dialogue with the FG on due to the toll it takes on the budget of the country.

Part of the reasons why it may be very difficult for the organized labour to adequately tackle the issue is due to constitutional constraints with the approval of a majority of the lawmakers required before any changes can be affected.

On Monday, November 5, the Academic Staff Union of Universities (ASUU) embarked on an indefinite strike for the umpteenth time with the National President of the body, Biodun Ogunyemi, explaining the reason is to protest the poor funding of Nigerian universities and the alleged plan by the federal government to increase students fees and introduce an education bank.

Ogunyemi said, “The Nigerian government experimented with it for 7-8 years; it failed.

“So the government had to set up a ministerial committee at the federal executive council to go and wind up the national education banking plan in 2001/2002, something they started in 1993.

“So for seven to eight years, the experiment failed. Why did it fail? Government was not living up to its financial obligations towards the bank.

“There was widespread corruption, capacity of students to pay back the loan was not there, because there were no jobs and there are still no jobs.

“So you can imagine what will become of a bank that the loan equipment is not coming or is very low, the rate of payment is low or not coming.

“And we told them all of these but they went ahead to come up with the idea that well, we have calculated the cost of what we need to train an undergraduate and they have estimated that it will be N1 million that they will borrow from the bank.

“These students will borrow 1 million, but when they borrow, 70 per cent of it will be paid directly into the universities and 30 per cent will be given to students to maintain themselves. We smelt a rat.

“Why? Why are you insisting that students who do not have the capacity to pay should borrow and that this time around the money will not be given to them will be paid directly to universities irrespective of whether private or public.”

Just imagine a government shirking on its responsibilities to ensure the country has a functioning educational sector yet the organized labour was nowhere to be found during the interlude only to cry hoarse whenever the issue of a national minimum wage comes up.

It is perfectly understandable if millions of undergraduates from impoverished families are not exactly sympathetic to their cause.

THE MINIMUM WAGE ISSUE

It would amount to blatant disingenuousness to lampoon the organized labour for forcing the FG and various stakeholders of the tripartite committee without considering the various laws governing the issue and economic indices since the last review.

To be candid, the agitation by the NLC and affiliates for a new national minimum wage for Nigerian workers has merit.

Evidently, the current economic fundamentals do not favour continuing to keep the current N18,000 minimum wage approved since 2010.

Since 2015, the pay became due for another review in line with the provisions of the National Minimum Wage Act (amendment) 2011.

Whatever indices or parameters used to arrive at N18,000 in 2010 must have become grossly obsolete.

In 2011, the Central Bank of Nigeria (CBN) data showed inflation at about 10.8 per cent, with the exchange rate of the Naira to the dollar averaged between N151.96 and N155.26.

The country’s gross domestic products (GDP) stood at about $411.7 billion and GDP growth rate at about 8.2 per cent.

In 2018, the NBS put inflation rate in the second quarter of the year at 11.23 per cent, with an exchange rate of Naira to the dollar at N306.25, or N362 in the parallel market. GDP is estimated at $375.77 billion since 2017, growing at the rate of 2.9 per cent.

To compute a minimum wage, consideration must be given to the prevailing cost of living index, inflationary trend and capacity of employers to pay a living wage.

According to Investopedia, a living wage refers to a theoretical wage level that allows an individual to afford adequate shelter, food and the other necessities.

A living wage should be substantial enough to ensure that no more than 30% of it gets spent on housing. The goal of a living wage is to allow employees to earn enough income for a satisfactory standard of living.

Therefore, in approving minimum wage, consideration must be given to all the essential needs of workers and their families but the FG does not consider all these which is baffling considering the poor state of the economy that necessitates an upward review of wages is caused by successive maladministrations.

The real issue in the minimum wage debate is no more whether the demand is necessary, but whether a wage of N18,000 is enough for workers to live in relative comfort.

Even the initial N56,000 figure proposed by the organized labour translates into a paltry N1,866 per day which is considerably less than what some countries pay their citizens as unemployment allowance.

IS THE DEMAND FOR N30,000 REALISTIC?

This question is especially pertinent since the organized labour disclosed 33 states out of the 36 states of the federation are owing various months arrears of salaries to their workers at N18,000 a month.

Not even the so-called oil-producing states that receive additional derivation revenues from the monthly federation account allocations have been able to meet this obligation.

The reason is that the economy has been struggling to stabilise, hardly able to assimilate further recurrent pressures, following its fragile recovery from one of its worst recessions in the country’s history in 2017.

Interestingly, the organized labour’s argument for a new minimum wage is based on the rising inflationary trend.

Regardless, the flipside of the argument has been that the demand for a new minimum wage at this time could fuel inflation in the economy.

Rather than demand for a very huge upward review that may spiral the economy into hyperinflation, the organized labour should demand increased investment in critical sectors of the economy and social amenities that usually take a sizeable chunk of their monthly salaries.

The FG should focus on the development of social infrastructures that take a large percentage of the workers’ salaries.

These include food production, by working with the universities and polytechnics to utilise their scientific research findings; incentivising the textile sector to produce clothes, providing low-income housing and affordable mass transportation.

As the populace awaits the new figure to be announced by the FG as the new national minimum wage, one can only hope it takes into cognizance the various factors bedevilling the average Nigerian worker.

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