Minimum wage: How much should it be?

NEXT month will make it five years since President Muhammadu Buhari approved the lifting of the country’s minimum wage from N18,000 per month to N30,000. Since then, a lot of water has passed under the bridge which has brought about a fresh agitation for the upward review of the minimum wage.

There is a staggering economic hardship brought about by the removal of subsidy on petrol and the unification of the exchange rate of the naira. These measures have sent the prices of food, fuel, drugs and other goods and services through the roof.

There is therefore unmitigated hunger and anger in the land. The situation is compounded by the fact that Nigeria is largely an importdependent nation. Therefore, the price of every item, whether imported or not, is dollarised. If you want to buy cocoyam or corn, both of which are locally produced, don’t be surprised if the seller has already worked out the price in dollars and converted it to naira for you.

The epidemic of the dollarisation of the prices of all goods and services in Nigeria is catching on. And that is partly why goods and services you bought at reasonable prices one year ago are now sold at three or four times the former price.

So, the Nigerian workers have a right to ask for a new minimum wage that is a living wage. The N30,000 minimum wage is putting a wedge between the worker and a decent life. President Bola Ahmed Tinubu has set up a 37member tripartite committee on the new minimum wage. The workers’ bodies have come up with figures that they consider living wages.

From an initial ridiculous figure of one million naira per month, the Nigerian Labour Congress ( NLC), has now come down to a less ridiculous figure of N709,000. The Trade Union Congress ( TUC), is proposing a figure of N447,000 a month. The Labour Unions who had meetings with workers and other stakeholders in each of the geo- political zones have put their own figures on the table as follows: N540,000 in the South East, N794,000 in the South West, N850,000 in the South South, N560,000 in the North East, N485,000 in the North West and N709,000 in the North Central.

On the other hand, the state governors are proposing figures between N45,000 and N70,000 based not necessarily on living wage but on what they think they can pay. Some of them, we understand, have not been paying the N30,000 approved since 2019 due to impecuniosity.

However, a Labour legend, Issa Aremu, who is the Director General of the Michael Imodu National Institute for Labour Studies ( MINILS), has proposed a figure that looks more realistic than all the ones thrown into the basket by all the interested parties. He thinks that a figure of between N120,000 and N200,000 is both realistic and decent. I think so too, but I do not believe that whatever figures are arrived at should be applicable to all states in a geopolitical zone.

One of the problems with Nigeria is the unconscionable uniformisation of everything in Nigeria, even though there are wide disparities among the states. If you ask states in the South West to pay N794,000, perhaps only Lagos can pay. Most of the other states in the zone have a budget that is less than one fifth of the N2.2 trillion budget of Lagos State.

In the South South, it will amount to grave injustice to ask Cross River State to pay what Rivers or Akwa Ibom States can afford to pay. There are big gaps in revenue and resources among states in all the geopolitical Zones. To be realistic, I think that each state government should be allowed to negotiate with the Labour Unions in their states. Any uniform minimum wage that is going to be recommended by the 37- person Committee set up by President Tinubu is bound to be unfair to some states. Consider the fact that up till now, some of the states have not been able to pay fully the N30,000 approved in 2019. Some of them are owing salaries to their Local Government employees or teachers or pensions to their pensioners. So, while the Labour Unions are asking for a living wage, the financial capacity of the states must be taken into consideration.

While the financial capacity of the states is reasonably well known, no one knows precisely what can be described as a living wage because a living wage differs from person to person and from family to family. It differs because there are different strokes for different folks. Some workers may prefer to eat Agege bread and wash it down with just water from the tap. Others may like rice and chicken and a bottle of beer called Chairman.

Some workers may prefer to go to work on Okada or Keke NAPEP, while others may prefer a ride in a taxi alone. Some workers may appear for work in a well- tailored suit, while others may turn up in shredded jeans and sneakers or slippers.

So, a living wage differs from person to person and those who are working on the subject must find the mean, the mid- point, which can help them to determine what a living wage is. A living wage is what I can call a decent wage and for me, a decent wage is central to the economic and social development of a country. It helps to reduce poverty and it also leads to the attainment of a dignified life among the citizenry. I believe that the reason the Labour Unions are asking for wages that seem unrealistically high is because of the glamorous life of luxury that members of the executive and the legislature are living.

Stakeholders have been calling for the pruning of the life of luxury by members of the two arms of government, especially now that the economy is in a tailspin. Some state governors have more than 50 Personal and Special Assistants, glamourously called PAS and SAS. Many of them are simply glorified thugs who perform ungodly acts during elections. That seems to be the reward for their expertise in election shenanigans.

The governors must find ways of cutting their spending in other areas by doing some jobs through their Ministry of Works by direct labour instead of awarding bogus contracts. There is also the view which I share, that there must be devolution of powers from the centre to the states, which will involve a review of the revenue sharing formula in favour of the states.

This restructuring will help the states to find their rhythm and their comparative advantage that gave the regions the wealth that they made in the 50s and 60s. The idle life that the states live today has made them lazy and unproductive because of the awoof money that they collect every month from Abuja. The states have not been able to significantly improve their internally generated revenue by exploring various ways of minting money from the assets in their states.

My unsolicited advice to the Labour Unions is that while their workers deserve a better pay than what they are earning now, they must be realistic in their negotiations because the governors are not exactly sitting pretty. A lot of them have a huge financial burden to carry, a carry- over from the past. For every action there are seen and unseen consequences.

If the Unions push too hard for unreasonably high wages, the consequence is that it may result in loss of jobs. And for me, it is better for many people to retain their jobs and receive salaries that are realistic than for a few people to earn unrealistically high wages while others are thrown into the unemployment market.

The problem here is where to find the balance between getting the right pay and preventing retrenchment of workers. It is a very, very difficult task. I don’t envy any of the parties involved in the business of deciding this, neither Tinubu nor the state governors nor the Labour Unions.

In the private sector, when people talk about salary increase, they also talk about productivity. In the private sector, the bottom line is profit. So, it is the profit motive that drives the workers to improve their work so that they can achieve their assigned targets. In the public sector, no one talks about profit, government companies in Nigeria hardly make profit because the government hardly set targets for them and hardly holds them to account.

That is why in all of this conversation about minimum wage, there is no discussion of productivity. It is assumed that once you go to the office, you deserve a higher pay whether you work hard or not. That is why Nigeria is the way it is, Jaga jaga, Jaga jaga. No water, no electricity, bad roads, no security, no food, no functioning hospital, poor educational facilities. You can add to the list.

The other problem in our country is that we believe in the philosophy that one size always fits all. Everything must be done the same way in all the states of the Federation, no difference despite the differences among states.

That is why we run a Unitary Constitution in a multi- ethnic, multi- religious and multi- cultural Federation with obviously significant differences. That is why we are stuck in the mud and have been stuck in the mud for many years now.

To be realistic, I think that each state government should be allowed to negotiate with the Labour Unions in their states. Any uniform minimum wage that is going to be recommended by the 37- person Committee set up by President Tinubu is bound to be unfair to some states.