THERE are pregnant indications that the national minimum saga will roll on for some time without conclusion. Organised labour has been agitating for an upward review of the minimum wage shortly after President Bola Tinubu cancelled petrol subsidies and merged the naira exchange rates. Hopes that the increment will coincide with the first anniversary of the Tinubu administration in May have been dashed. The uncertainty is agonising for workers, who bear the major brunt of the economic hardship.
After five years, the minimum wage is due for a review. The last review was in 2019 under President Muhammadu Buhari. From N18,000 per month, it moved to N30,000. In 2019, the inflation rate declined by 0.7 per cent to 11.40 per cent and the naira exchanged at N325 to $1. These numbers have been wiped out. May inflation was 33.95 per cent and the naira at N1,500/$1. This makes nonsense of the N30,000, which some state governments are not even paying.
Recognising the need for a review, Tinubu set up a tripartite committee – the centre, sub-nationals, and the organised private sector and labour –to iron things out. After the back-and-forth, the committee settled for N62,000. Labour, which initially went for N600,000-plus, settled for N250,000.
In the process, labour called a strike, which lasted for two days but the government got the message. This was when Tinubu unilaterally sent an executive bill to the National Assembly to pass the new minimum wage. Fearing this might instigate a fresh round of agitation, the President formed a new committee to agree on the increment. This undermines the work of the tripartite committee. It suggests that the President used the committee to buy time.
Nigeria’s wages are notoriously low, yet it is a complex matter. In the 2010 negotiations for N18,000 from N12,000 per month, the state governors claimed they could not pay. They then manipulated President Goodluck Jonathan to raid the Excess Crude Account before agreeing to the increment.
Many states are adamant that they cannot pay the proposed wages, or they will go bankrupt. However, all three tiers of government have more money after the removal of petrol subsidies in May 2023.
A new report by the Nigeria Governors’ Forum said if wages were increased by 50 per cent, 13 states would go bankrupt. In a new report, Data Services and Resources analysts identified many states incapable of financing a new minimum wage.
Indeed, to cover the N30,000 payment, the Federal Government resorted to borrowing. The private sector is contending with multiple taxes, high energy costs, and steep recurrent and shabby infrastructure.
So, this comes down to harsh reality. Labour should be realistic. An astronomical increase will hurt public sector workers, just 5.3 million of the labour force. It will damage the private sector more. There will be factory closures and job losses will ensue. Labour should avoid this.
For the governments, it is time to cut their coats according to their clothes. The governments give the impression that they have funds with the obscene display of wealth among public officials. While the Presidency is angling for new aeroplanes, and buying SUVs for lawmakers with N57 billion, workers are dying of hunger. All parties should wake up.
The inability to pay is exacerbated by the consequential adjustments needed after the minimum wage has been increased. If only the minimum wage is increased, a time will come when the lowest-paid worker will be at par with those above him. Lower tax incentives at higher levels can however correct this imbalance.
To stop the periodic agitations for wage reviews, the government should improve the economy. It should bring inflation down, boost the productive environment, provide security and privatise to attract FDI.