New minimum wage, new maximum wahala

These are not the best of times for workers in the country. The times are as hard for them as they are for all of us outside politics and the corridors of power. We have all been drafted to the battlefield with the insanely rising cost of living. The trade union leaders were fully aware of this when they donned their multi-coloured uniform and observed the May Day ritual three days ago. Perhaps, their hope was buoyed by the rumours of a new minimum wage approved by President Bola Tinubu. I do not know what the rumoured 25% and 35% wage increase means in real naira terms. I suppose it must mean more money in the pockets of our workers. Good for them.

Whatever the president has approved will not end the minimum wage wahala. It is a permanent struggle every labour leader must wage in the interest of his union members. Ironically, the struggle is won and lost at the same time. Time and time again, market forces sink the minimum wage below the living wage even before it takes effect.

In effect, as I have consistently pointed out, a minimum wage offers the tempting assumption that it means more money in the pockets of workers to enable them live, not survive, from one month to the next. In 2015 labour pressed for a new minimum wage of some N80,000 or so. It did so against the unrealistic background of the state governors confessing that they could not pay even the N18,000 minimum wage that became part of the labour law since Obasanjo’s time on the throne. As at the time 27 of the 36 states could not pay their workers and pensioners. Did it make sense for labour to ask for an upward review?

            A minimum wage or to give it the correct name, a minimum salary, is not the solution to the problems of our workers. The problem lies in what we make of the cost of living. A higher salary is desirable. But for it to make sense to the earner, the cost of living must be bearable; prices of food, transportation, goods and services must be within the reach of the worker. Ours is oppressive. If a worker needs a basketful of a minimum wage to buy a fistful of gari, he loses more than he gains from his precious new minimum wage. 

Given the nature of our economy and its management, no minimum wage guarantees that workers will spend less on food, transportation, light and water. They cannot save for the inevitable rainy day. If workers spend their minimum wage on food, transportation, light and water, a minimum wage of even one million naira per month, would make no difference in their circumstances. It would be a burden they are forced to discharge with pain.

In a newspaper piece I wrote on November 26, 2015, I made the points hereunder. As I see it, the minimum wage palaver raises at least three fundamental issues and gives us as good an opportunity as any now to respond to them in an honest and non-sentimental way. 

The first is the nature of our federalism. Our nation is a sad inheritor of a military command structure. The detritus of a long military rule lingers. And we have a federal system in which power radiates from the ogas at the top – from the centre to the states and from the states to the local governments. The anomaly of a centralised federal system does not seem to cause us sleepless nights. The consequence is that the federal government assumed the right to impose on the states burdens they cannot bear – and force them to bear them, even if, in this case, their mosquito-like financial legs crumble under them. 

The nature of our federalism is patently hostile to the letter and the spirit of federalism. I have said so elsewhere before. I say it again. Our entire practice is inimical to a system of government that, more than anything else, derives its relevance from the degree of independence it grants to its federating units. Ours is a united and uniform federal system in which the states have a uniform pay structure for their civil servants and public officers. And so, Kebbi state, with near-zero internally generated revenue, must pay the same salaries and allowances to its civil servants and public officers as Lagos state, about the only state that can survive without the monthly handouts from the federation account.

Given this anomalous situation, the simple solution is to have federal and state minimum wages. The Americans do. It works for them. The current minimum wage should be federal and applied to federal civil servants only. We must then agree that each state should be allowed to determine its minimum wage, provided no state pays less than half or two-thirds of the federal minimum wage. 

My second point is the danger everyone loves to mouth at convenient points – our total dependence on crude oil as the main source of our national revenue. Misfortunes in the international crude oil market tend to suddenly empty the treasuries and confront our rulers with the unpleasant task of scratching the bottom of the barrel. Remember 1981 and austerity measures? We have had warnings about this danger since petro-naira lulled us into the false belief that we are a rich nation. Despite the danger we have not done much to diversify the base of our economy. Past economic experiments, such as my favourite, the structural adjustment programme, the home-grown alternative to the IMF formula, ended badly, leaving their objectives and our economy in the lurch. 

My third point is the need for a shift in our development paradigm. The truth is that we are not developing in any meaningful way. Our arrested infrastructural development points to a deeper malaise in the system, namely, lack of investments. It is not news to anyone of us that the federal, state and the local governments commit between 75 and 90 per cent of their annual budgets to recurrent expenditure. This leaves a piffling 10 to 25 per cent ostensibly for capital votes. 

This lopsided vote is a clear and dangerous recipe for a backward national development. No country has ever approached this dangerous threshold and witnessed itself make the leap as the Asian Tigers did about a decade ago. Can we reverse it and commit more to capital votes? I do not pretend to have the answer. But I know this: we cannot spend the bulk of our revenue on the payment of salaries and allowances of civil servants and public officers and expect a miracle in our national development. Governments do not exist to pay salaries and allowances. Shifting the paradigm would be painful but we have no choice if, indeed, we want to see a meaningful development at all levels in our rich but poor country.