New Minimum Wage: Organised Labour, FG set for Showdown

Ayuba Wabba

The federal government and the organised labour are still haggling over the review of the new minimum wage  

By Anayo Ezugwu

The organised labour in Nigeria is set to tackle the federal government over its proposed N24,000 minimum wage for workers. The labour leaders through Nigeria Labour Congress, NLC, Trade Union Congress of Nigeria, TUC and United Labour Congress of Nigeria, ULC, will meet next week to take a decision on the matter.

Ayuba Wabba, president, NLC, told Channels Television Sun Rise Daily on Thursday, October 18, that the committee adopted through a motion to recommend N30,000 as the minimum wage and that motion was moved and seconded by members from the labour union and the employers’ representatives.

The motion was put before the whole house and it was debated, he said, adding that labour’s position was to take the first scenario which was N38,000 and make it a round figure of N40,000, but after the deliberation, it was dropped.

“The organised private sector said because the economy is not favourable, especially because of the high cost of doing business, they proposed to labour to consider N30,000 which everybody can pay. And therefore, through a motion unanimously adopted by labour looking at the fact that we don’t want anybody to be retrenched that N30,000 was adopted. We don’t know how the N24,000 came in because in the cause of the discussion by the committee, every of the constituents came with figures. As I said labour came with N65,000 but in the cause of give and take we agreed N30,000. The final report was signed.

“But for federal government to be saying that there was no agreement is not true. The negotiations have ended. I’m speaking as a member of the committee. The chairperson of the committee is still alive.”

But Omabie Akpan, director, Trade Union Services, Ministry of Labour, said the figure by the labour is not true. She said the figure was an agreement between the labour and the organised private sector, not the government. “He said there is a consensus and that they have arrived at figure. And the figure they have arrived is the one they agreed with the private sector.

“Now if you are talking about any labour matter, we talk about tri-partitism, which include government, the employers and workers. In this case, the figure he is presenting, represent the figure for the workers as well as the organised private sector. You can’t say you have reached a consensus where the tri-partitism is not represented,” she said.

With the federal government and the organised labour at daggers drawn over the new minimum wage, there are three possible scenarios to consider. If the federal government gets its way by pegging minimum wage at N24,000, representing 33 percent increase from N18,000, it would push its wage bill by N615 billion from N1.866 trillion in 2017 to N2.4 trillion. This figure represents 90 percent of the government’s total revenues in 2017.

Again, if the NLC succeeds in pegging the minimum wage at N30,000 (67 percent increase) from the initial figure, then personnel costs will rise by N1.25 trillion to N3.1 trillion, 14 percent higher than the government’s 2017 revenue representing 34 percent of the 2018 budget. That could leave the government no choice but to borrow, just to meet personnel expenses, without adding statutory transfers, overhead costs, debt service and capital expenditure.

Both parties may meet each other half way and settle for N27,000, representing a 50 percent increase from the current minimum wage. This implies a wage bill of N2.7 trillion, equivalent of the government 2017 total revenues.

Interestingly, if any of the illustrated scenarios happen, it could fuel inflation in the economy even though labour’s argument for a new minimum wage is based on the rising inflationary trend.

Bismarck Rewane, managing director, Financial Derivatives Company Limited, in an interview with Punch warned that the implementation of the proposed new minimum wage will worsen the unemployment situation in the country. There will be a backlash if an increase in wages is carried out in the country, he said, adding, minimum wage is  low in Nigeria due to the country’s low level of productivity.

“If you increase salaries, you may have to reduce the number of people (workers) you have. Minimum wage is tied to productivity. If productivity in Nigeria is low, minimum wage will be low. If you increase wages without increasing productivity, you will have to fire (sack) people. Once wages go up, costs would also go up. Once costs go up, inflation goes up. Once you increase wages, then you may have to lay off (retrench) people,” he said.

Be that as it may, even the state governments that would pay greater part of this new wage are indirectly against it. The state governors through the Nigerian Governors Forum, NGF, have said they don’t have the resources to pay the new minimum wage. Governor Abdulaziz Yari of Zamfara State and chairman of the Forum said the body is not against the upward review of the minimum wage but worried about the ability or resources to take care of any agreed minimum wage.

Yari told journalists on Wednesday, October 17, in Abuja, that the forum had made it clear that the governors were not against any upward review of salaries or against the NLC to get minimum wage reviewed. “But 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 percent, some 50 percent 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,” he said.

– Oct. 19, 2018 @ 19:29 GMT |

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