N22,000 or job cuts?

The push and pull over a new minimum wage continued unabated when state governors insisted on Wednesday night that they cannot pay the N30,000 per month that labour is demanding. A communiqué issued at the end of an emergency meeting of the Nigeria Governors Forum [NGF] in Abuja said if Nigeria Labour Congress [NLC] insists on N30,000 minimum wage, then it should accept a downsizing of the workforce across the country. Alternatively, they said, the Federal Government should agree to a review of the national revenue allocation formula.

Both options are severely problematic but NGF Chairman, Governor Abdul’aziz Yari of Zamfara State said the forum set up a committee to meet President Muhammadu Buhari again to find a way towards quickly resolving the minimum wage imbroglio. Members of NGF’s committee include governors of Lagos, Kebbi, Plateau, Bauchi, Akwa Ibom, Ebonyi, Enugu and Kaduna states.

A solution to the issue appeared to be at hand when the Tripartite Committee on Minimum Wage led by Ms. Ama Pepple submitted a report to President Muhammadu Buhari on Tuesday last week in which it recommended N30,000 national minimum wage. Yari now said Pepple’s committee “did not take [NGF’s] submission of N22,500 because it came late…States are the key stakeholders in this business. So a situation whereby our report is not taken…then I don’t know how the committee wants us to work.”

NGF forcefully made its case, saying “When the president [Buhari] assumed office [in 2015], 27 states were not able to pay. So now that you say N30,000, how many of them can pay? We will be bankrupt.” Yari cited the example of Lagos State which currently has a monthly wage bill of N7 billion. If the N30,000 minimum wage is adopted, he said Lagos’ wage bill will increase to N13 billion. Yet, he said it is the only state that can manage to pay it because it has a large internal revenue base whereas even oil-rich Rivers State cannot pay.

Yari did acknowledge that state governments and their governors are accused of misplacement of priorities, not to mention the alleged high level of corruption in many of them. Still, the country is now faced with a cruel dilemma because organized labour has given a December deadline for all processes leading to the enactment of the new minimum wage to be completed, otherwise it will embark on its indefinite, total and nationwide strike action.

The strike action was narrowly averted earlier this month when the Federal Government indicated its willingness to accept labour’s demand for N30,000 minimum wage. Indeed, when he received Ms Pepple’s report, President Buhari was reported to have said he accepted the recommendation and would forward a bill to that effect to the National Assembly. Within a day however, the Presidency began to slide away from the commitment and it is not certain now what its position is. Labour is however applying pressure on Buhari to submit a bill to the National Assembly without delay to enact the new minimum wage into law.

Probably no one in Nigeria disagrees that the minimum wage ought to be increased from the current, laughable N18,000 a month which has been severely eroded in recent years by depreciation of the naira, inflation and economic recession. State governors’ insistence that they cannot pay more than N22,000 is however suspect because the real problem, as we learnt in all previous cases of wage increase, is not the minimum wage but the adjustments that are made to all other levels of workers’ wages.

This problem of a ballooning payroll will be minimized if higher grades of workers receive only slight increases in their pay. We urge NGF to explore this option. On the other hand, we ask labour not to rigidly insist on the N30,000 for all tiers of government and private sector. A final option is to decouple the two, i.e. fix separate minimum wages for federal vis-à-vis state government and private sector workers. Job cuts should however be out of the question.