Nigeria’s New Minimum Wage and the Rising Questions of Implementation and Viability

Daniel Whyte
20% Complete
 22-Apr-2019

In Nigeria, among the top topics that have been in the front line for national debates or discussion about the nation’s progress and conditions of the workers over the past months is the issue of the new national minimum wage.

The organised labour unions in the nation had rejected the erstwhile 18,000 being paid as minimum wage of workers and initially demanded that it should be increased to 56,000 Naira.

Ordinarily, an employer of labour should not pay a worker below the minimum wage that is meant to guarantee a minimum living standard in a given economy. Nigeria’s minimum wage of N18,000 per month was adopted in 2011. The minimum wage is subject to a set periodic review for the purpose of compensating as much as possible for any adverse changes in the cost of living and/or enhancing the minimum wage from one period to another

Regardless of the adoption of a new national minimum wage, the overriding concern relates to the extent of poverty confronting the country, which is being supposedly tackled.

According to CBN data, Nigeria’s GDP per capita declined from US$3,144 in 2014 to $1,897 in 2017, a drop of 40 per cent. Worse still, the distribution of GDP is highly skewed in favour of the rich. As at end-December 2017, indexmundi data indicated that 70 per cent of Nigeria’s population lived below the poverty line of less than $693.50 per capita per annum. (Note that only 3.3 per cent of China’s population and 21.9 per cent of India’s population lived below the poverty line.) Strikingly as at end-May 2018, the Brookings Institution projected that Nigeria had displaced India to become home to the world’s largest number of people living in extreme poverty.

Noticeably, politicians especially candidates for the post of presidency seeking popular support had hammered on the need for an increment in the national minimum wage as a means of arousing trust and popular interest.

For instance, Atiku Abubakar who was presidential candidate under People’s Democratic Party promised to pay 33,000 Naira as minimum wage for his personal employees and a living wage for workers if elected as president.

Similarly, Omoyele Sowore, the presidential candidate of African Action Congress (AAC) promised to increase the minimum wage to 100,000 if elected.

Truly, the national minimum wage had long been due for review. Specifically, the N18,000 earned as minimum wage has been due for review four years ago (2015).

As aptly captured in a Vanguard report entitled “Minimum Wage, Maximum Politics”, “constitutionally, a New National Minimum Wage is a quinquennial law; the last was in 2011, so there should have been a new one two years ago”.

The salaries should be negotiated and perhaps consequently adjusted at least every five years to keep pace with inflation, according to the Nigerian constitution.

However, the Nigerian government did not return to the negotiating table with concerned unions until they demanded for a review and most importantly the increment of the wage and  threatened to embark on a nationwide strike if not granted.

After several mass protests, threats of strike actions and agitations from the organised labour unions, civil society groups and well-meaning Nigerians, a conclusion of 30,000 as National Minimum wage has finally been reached and recently assented by the President, Muhammadu Buhari.

Although, as noted by a report published on Africa is a Country, “a 67% increased minimum wage sounds formidable, the new minimum wage of 30,000 Naira (US$83) is in real terms it lower than the 2011 minimum wage at the time of agreement (US$110)”.

The Rising Question of Implementation and Viability

Now that the new national minimum wage of 30,000 Naira had been assented, the battle has therefore been silenced. However, a new battle is looming and this arises from the question of implementation and the viability of the new wage.

For sure, to pose the greatest challenge are the state governments headed by governors who had initially outrightly rejected the 30,000 Naira as national minimum wage.

The chairman of the forum and Governor of Zamfara, Alhaji Abdul’aziz Yari, once told newsmen that the payment of the new wage is impracticable.

As culled from a report by Daily Post, he said “we still said that we want to pay but the issue is the ability to pay. If we say no, just pay, I don’t know how this formula will work and I don’t know how we can get solution to the issue”.

“Today it is N18,000. In 2015 when the president assumed office, 27 states were not able to pay, not that they chose not to pay”.

“Now you say N30, 000, how many of us can pay? We will be bankrupt”.

The Governors’ forum had then suggested that they can only pay 22,500. They also threatened to sack workers because they cannot pay the bill.

The ostentatious lifestyles of most governors do not offer logical persuasion to the citizens they govern that they indeed cannot pay the new minimum wage. Living like modern-day emperors with little or no checks from the legislative arm, these governors have not given sufficient reasons to convince workers that the demand of N30,000 minimum wage is too much.

In another report by Punch, the Chairman of the Nigerian Governors’ Forum, Abdulaziz Yari, said “the problem of state is the capacity to pay what is agreed. As we are talking today, we are struggling with N18,000. Some of the states are paying 35 per cent, some 50 per cent and still some states have salary arrears. So, it is not about only reviewing it but how we are going to get the resources to cater for it”.

As at now, 35 out of 36 Nigerian states are owing workers’ salaries “despite the billions of Paris Club refunds they have received from the Federal government”, Sahara Reporters reported.

The claims and threats of the governors have however been dismissed different persons and bodies. Some have called on them to cut down on their humongous expenses or rather resign if they can’t pay the amount.

The Nigeria Labour Congress (NLC) while responding to the governors’ bluff of sacking workers said “we propose that since a few political office holders are bent on enslaving Nigerian workers with peanuts mislabeled as salaries, we urge such elected public officials to subject their humongous salaries and allowances, reputed to be among the highest in the world, pro rata with the minimum wage they want to force down the throats of Nigerian workers”.

Azubuike Azubuike, chairman of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), suggested that the supposed inability of the governors to pay the minimum wage is as a result of their lack of creativity to create wealth for their state and be independent. He therefore urged them to resign if they can’t pay.

According to him “the primary responsibility of any government is the welfare and security of the people. If you cannot pay minimum wage, then why are you there as a governor? Why are our governors not thinking?”

“Most of these our governors, what was their financial status before they venture into politics? The greatest problem is that most of them are only interested in what they can get and not what they can give”.

“There is nothing like over bloated manpower in the civil service, the problem is that most of our politicians do not have the interest of Nigeria at heart”.

“How many Senators and how many House of Representatives members do we have in this country? How much is their salaries and allowances? If they can be able to block the wastages, we will have enough to even pay more than N30,000 and still have enough to develop the state”.

Tony Momoh, an ex- minister of information has also said the new minimum wage will lead to chaos because it will lead to a situation where many states will not be able to pay and consequently, strike actions and unrest will arise.

Therefore, the issue of viability is worthy of urgent attention and  consideration. It is indeed a big question.

According to a report by THIS DAY, however, “the issue at hand should not be whether or not the states can pay, what needs to be urgently addressed is the management of funds by the governors. The state governors must be fiscally responsible”.

“Given the reported excesses of the state governors, economic analysts are of the view that the state governors must cut down on their security votes with a view to freeing up the needed funds to cater for the welfare of the workers. Apart from the wasteful spending of security votes, huge resources committed to frivolous trips and medical tourism by these governors at the expense of their states, should be channeled to successfully implementing the new minimum wage bills”, it further reads.

Despite this rising question of whether the states can pay or not, the NLC on their side have urged the commencement of the implementation of the bill.

According to the Head of Information and Publicity, Mr. Benson Ukpah, “we are delighted by the signing of the new minimum wage Act by the president. We commend him for it and urge for the immediate implementation of the N30,000 minimum wage considering that the matter has been pending for so long”.

“We urge various governments and employers of labour to commence immediate implementation with arrears”.

Another question arising is the question of if the new national minimum wage of 30,000 Naira is enough to guarantee an average Nigerian Survival?

As noted by the Trade Union Congress of Nigeria, TUC, in a statement by its President and Secretary General, Comrade Bobboi Kaigama and Comrade Musa-Lawal Ozigi, although they appreciated the approval of the new wage, they lamented that the gains had been washed by looming inflation as prices of commodities have risen while employers have not even commenced paying.

“The N30,000 monthly National Minimum Wage that we are even asking for to a family of six actually amounts to less than N50 per meal per person. It is exclusive of utility bills, school fees, etc”, the statement reads.

In conclusion, the country has a labour-surplus economy. Although long overdue and desirable, to raise the national minimum wage would nevertheless only increase the income of workers who remain employed as well as grow aggregate disposable income with some positive impact on economic expansion. However, the new wage level would force some low ranking employers to lay off some workers. Some other employers may simply continue to pay what they can afford even if it falls below the adopted new wage. In short, the national minimum wage would not be enforceable upon all employers.

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