Minimum wage: Nigerians in fear as Labour refuses to shift gaze

The industrial disharmony in the country took another twist this week when Organised Labour insisted that no agreement has been reached on the new national minimum wages as said in President Ahmed Tinubu’s nationwide broadcast to mark this year’s Democracy Day; BENJAMIN SAMSON reports. 

President Tinubu had during his nationwide Democracy Day broadcast said a consensus had been reached on the long-debated new minimum wage between the federal government and Organised Labour.

In the national broadcast in Abuja on Wednesday, President Tinubu said an executive bill would “soon be sent to the National Assembly to formalise the new minimum wage agreement.” The president emphasised that his administration chose a democratic approach over dictatorship in addressing the demands of labour unions.

However, in a prompt statement released the same day, the acting President of Nigeria Labour Congress (NLC), Prince Adewale Adeyanju, said there was no agreement reached by the Tripartite Committee on the National Minimum Wage at the time negotiations ended on Friday, June 7, 2024.

Adeyanju stated that rather two figures such as N250, 000 from Organised Labour and N62, 000 from the government and Organised Private Sector were arrived at and ought to have been submitted to the president. The labour leader asserted that anything to the contrary was not only doctored but won’t be accepted by Labour.

Vicious circle 

In an interview with this reporter, a lecturer in the department of History and International Studies at Landmark University in Kwara state, Dr. Isaiah Abdulganiyu, said successive increments of minimum wage over the years hadn’t solved problems it was intended to solve.

He said, “The recent nation-wide industrial action in Nigeria brings back memories of the last minimum wage increment. And what history tells us is clear: though intended to alleviate the financial burden on the working class, it had a complex aftermath that raises questions about its effectiveness and the broader economic effects.

“Before embarking on strike in early June, the Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC) had proposed ₦615, 500 and ₦494, 000 as the new national minimum wage, citing inflation and the prevailing economic hardship. When the government showed indifference and proposed N60, 000 instead, the union ordered its members to boycott work from Monday, June 3, marking the beginning of the industrial strike.

“A trip down memory lane reveals Nigeria’s minimum wage changed three times from 1981 to 2019. It was increased to ₦5,500 in 2000 and to ₦18, 000 in 2011. In 2019, the government reviewed the minimum wage, with workers demanding ₦30, 000.

“The last increment in 2019 and the current minimum wage were hailed as a victory for workers, raising the wage to a record high of ₦30,000. This analysis shows that in a fight between the labour association and the federal government on minimum wages, the labour group always wins.”

Continuing, he said, “However, the increase did not occur in isolation. To fund this wage increment, the government needed significant adjustments to its revenue generation and budget allocations to meet up with the new reality. But as expected, this soon resulted in unintended and far-reaching implications for the economy.

“One of the most notable responses was the increase in Value Added Tax (VAT) from 5 per cent to 7.5 per cent. The move, justified by the federal government to generate additional revenue, inadvertently placed a heavy financial burden on the average Nigerian. It affects everyone and everything, most especially the low-income groups who spend a high proportion of their income on essential goods and services. The analysis is simple: when the government increased the VAT, inflation ballooned and the people needed more money for few goods.

“In the long run, the increment in minimum wage could not smother the ember of hardship, as the former was later cancelled by the high prices.”

He said further, “Also, when the government required more money to pay its workers, it increased the national budget. But the government, like other institutions, is not a river of cash; thus, in need of more naira to cover the costs. So, it borrowed more money and increased the country’s debt profile in the process.

“This forced the government to spend more money than it had; so it borrowed extra funds to cover the shortfall. As it stands now, Nigeria’s debt profile has become increasingly worrisome, with a growing portion of the budget dedicated to debt servicing. At the end of 2023, each Nigerian already owed N405, 000. This scenario raises concerns about the sustainability of such financial manoeuvres, especially when they are accompanied by robust economic decline.

“Four years later, this analysis reveals, the minimum wage increment did not solve the main problem: inflation. Prices of essential commodities like food, transport, and housing kept rising, so the higher wages did not really mean workers could buy more things, rather use more cash for fewer goods.

“To mitigate the hardship caused by inflation and ensure that wage policies truly benefit workers, Nigeria needs to make changes to its economic strategy and not raise the minimum wage now and then.

“For instance, labour groups could demand the federal government to focus on cutting unnecessary expenditures. The step to cut the spending is a move to eradicate the numerous bogus allowances of public officials, which consume a significant portion of the national budget without corresponding benefits to the populace.”

Frivolities 

However, a public affairs analyst, Usman Dirisu, speaking with Blueprint Weekend, urged governments at all levels to cut costs in order to give workers a living wage.

He said, “The labour unions’ refusal to accept what has been offered is understandable. Successive governments have over the years given the impression that it is drenched in cash. Poor judgement has been demonstrated in lavishing billions on frivolities while asking workers to live in hope.

“Over 140 million Nigerians have sunk into multidimensional poverty due to a steep rise in food, transport, electricity, health care, and other basic costs – a direct result of petrol subsidy removal and naira devaluation by the administration.

“Examples of insensitivity to the cost-of-living crisis include the N57 billion allocated to purchase SUVs for legislators, 30 governors spent over N50 billion reportedly on refreshments, travel, and sitting allowances in the first quarter of 2024 alone. The vice-president’s residence has just been renovated at N21 billion. Each ranking senator got N500 million for constituency projects.”

Insensible strikes

Dirisu advised labour to make the demand realistic.

“Regardless, an agreement on the new minimum wage must be reached and it must be realistic. The labour movement needs to be pragmatic. Resorting to strike to force the government to concede to what it cannot realistically afford is counterproductive and hurts those whose interest labour seeks to advance. Paralysing seaports, airports, schools, banks, and hospitals makes no sense. The shutdown of the national grid was highly irresponsible. The oil sector alone reportedly lost N149 billion in one day.

“Insisting on a higher-than-affordable wage will force employers in the public and private sectors to make necessary adjustments. High wages will result in staff rationalisation and new openings taken off the market. Many lowly-paid workers will prefer low wages to no job at all.

“Public sector workers will be forced to go as the government at all levels trim the wage bill. Many states will default as they have done in the past and get away with it. Some are not even paying the current N30, 000.”

The way out 

Dirisu also said, “The NLC and its affiliates should know that raising wages does not necessarily translate into real benefits in the long run if inflation is not brought under control. To reach a consensus, labour and other parties should consider a minimum wage template relative to the cost-of-living variables in different states or regions.

“The labour unions should focus on pressuring the government to deliver security and social services and stabilising prices. These have longer-term benefits than the occasional pay rise. The government should stop the culture of waste and ostentation, which generates anger on the streets.”

Similarly, a chieftain of the Peoples Democratic Party (PDP) in Delta state, Chief Sunny Onuesoke, in his view, said the solution to the nation’s economic problem is not an increase in the minimum wage, but deflation of the economy.

Onuesoke, speaking with this reporter said wage increment would not solve the economic problem in the country, but would increase it. According to him, the organised labour was getting it wrong.

He said, “What Nigeria wanted is deflation. If you increase the salary to N1 million today, the prices of goods and services will keep increasing. The more you increase the minimum wage, the more it goes parri passu with the increase of goods and services. The average person who is not in the civil service, but produces food items like pepper, tomatoes, yam, garri, etc will increase his produce.

“Wage increase cannot resolve the inflation rate because as there is more salary increase, there is more currency in circulating in the system. When there is more currency flow in the system, the prices of goods and services will keep increasing. It is a simple economic theory. The more increases in workers’ salaries, the more you will build up the high inflation rate.

“The country is not being controlled by only civil servants alone. The civil servant is just 14 per cent of those providing services in Nigeria. They are insignificant margins. When you are thinking of civil servants, the private sectors are not addressed as civil servants. There is no private sector that will be able to pay that amount of money as salary monthly.”

She said further, “The people need social infrastructure that will downsize, that will deflate, and that will reduce the hard side of their hardship. What I am saying is that the federal government and state governors should intensify massive agricultural and housing programmes. They should subsidise and reduce the cost of education. Health insurance should be all embracing.

“Our problem is that we are giving projections without knowing the database of Nigerians. If you ask our leaders how many acres of land will produce a certain quantity of cassava, they don’t know it. But they go on air to produce certain figures borrowed from armchair economics or from their brain.

“Each local government should be able to have 80,000 acres of farmland of cassava, yam, maize, rice, etc. They should fix the refineries. What stops the country not to fix the four refineries till tomorrow? Is it a problem to fix the refineries? Why are we importing refined products and we are number six oil producing country in the world.”

FG’s appeal

Meanwhile, Minister of Information and National Orientation, Mohammed Idris, has urged Organised Labour to settle for a national minimum wage that will not undermine the national economy and lead to mass retrenchment of workers. 

Idris, who made the appealed while declaring open the 2024 Synod of the Charismatic Bishops Conference of Nigeria in Abuja, emphasised the need for a realistic and sustainable wage system that balances workers’ needs with the country’s economic realities.

“As I close, I would like to briefly touch on the matter of the new Minimum Wage, which the federal government is very committed to reviewing, realistically, and sustainably.

“As I have repeatedly said, the federal government is not opposed to the increase of wages for Nigerian Workers but we keep on advocating for a realistic and sustainable wage system for the workers – a wage system that will not undermine the economy, lead to mass retrenchment of workers and jeopardise the welfare of no fewer than 200 million Nigerians.

“We want the labour unions to understand that the relief that Nigerians are expecting, and that they fully deserve, will not come only in the form of an increase in wages. It will also come as efforts to reduce the cost of living and to ensure that more money stays in the pockets of Nigerians. And this is where programs like the Presidential Compressed Natural Gas (CNG) initiative come in. That program alone, by replacing or complementing petrol usage with CNG, will cut transportation costs by as much as 50 per cent.”