Minimum Wage: FG -Labour union, marriage of paradox to States


By Moses Adeniyi
The anxiety in the face of pressure to by all means win the 2019 general elections has seen by observers to be the gimmicks behind the Federal Government’s decision to hastily dance to the tune of Labour demands without a consideration of the factual sustainability of the new minimum wage.
Chains of controversies over the N30, 000 minimum wage phenomenon have generated steaming heat which is considered still evolving to further evoke some intriguing developments spuriously springing streams of actions and inactions which may end up bouncing back on the masses.
The recent policy decision of the Federal Government to increase Value Added Tax (VAT) from 5 percent to 7.5 percent is believed to be a calculated attempt by the government to put off some of the weight accruing from the increment of the minimum wage, diverting it on the masses.
The strategic measure (7.5 VAT) which has been incorporated in the Medium Expenditure Framework and Fiscal Strategy Papers, cannot too far be doubted as one of the strategic means the government is employing to ensure the loads of the new minimum wage bounce back on the masses for them to bear.
States’ reactions
The unfriendly disposition of State governments across the federation towards the new minimum wage with attempts to distance themselves from the statute is a another bone of contention reflecting the new standard is an agreement struck in ambitious haste to win election at all cost without deep considerations.
State governments in several ways with strategic demeanors have been making efforts to bring light, directly and indirectly, that they are not in any way ready to reconcile with the new wage standard.
Several States have been pointing fingers to the state of revenue coming into the covers of their pulse. There is certainly no indication to show that there would be any increment in the monthly federal statutory allocation to each State of the Federation in the face of the new development. This will no doubt yield multiple chains of effects negatively impacting and generating strains across the polity.
The Nigeria Governors’ Forum had on Monday declared that the consequential increments in the implementation of the N30, 000 Minimum Wage Law would depend on the capacity of each state government.
Declaring this, the Chairman of the Forum and Governor of Ekiti State, Dr. Kayode Fayemi, in the communique of the last meeting held on Monday, disclosed that the NGF made the resolution when it met to review current progress in the implementation of the minimum wage law.
Clarifying the Forum’s position in relation to the decision of the Federal Economic Council (FEC), Fayemi had argued that while state governors agreed to the N30, 000, FEC did not give considerations to determine the reality of what happens in the states. He stressed further that each state has its State Executive Council, which serves as the highest decision making body at the state level.
The NGF Chairman had stated firmly that “The day after this agreement was reached with labour, it was on record that I was on a national television and made the position of the governors clear; that for us, this was a national minimum wage increase, not a general minimum wage review.
“Yes, that may necessitate consequential increment, we have no doubt about that, but that is a matter for the States to discuss with their workers,’’
“The forum as the representative body of the States keenly followed what happened in the negotiations that led to that template.
“As far as we are concerned, the best the forum can do is to stick with what has been agreed with the States. States are part of the tripartite negotiations.
“States agreed to that N30, 000 minimum wage increase.
“States also know that there will be consequential adjustment but that will be determined by what happened on the state-by-state basis.
“Because there are different number of workers and different issues at the state level.
“Every State has its own trade union joint negotiating committee and they will undertake this discussion with their state governments.
Federal and Labour agreement
It was recently reported that the Federal Government had stroke an agreement with the Nigerian Labour Force over the implementation of the new minimum wage which has generated controversies since it was signed into law in April by the Federal Government shortly before the 2019 general elections.
The agreement arrangement which was scheduled for both sides (FG and Labour) to reach a resolution in an effort to avert a planned labour strike witnessed in attendance, the Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC) demanding for the full implementation of the new N30, 000 minimum wage and its consequential adjustment.
It would be recalled that since controversies have trailed the implementation of the N30, 000 minimum wage after Federal Government’s approval, the organised labour has been at loggerheads with the Federal Government over effecting its implementation.
Negotiation between the government and the Joint National Public Service Negotiating Council (JNPSNC), representing labour in the technical committee set up to negotiate the consequential adjustment of workers’ salaries as a result of the new minimum wage, had prior to the agreement broken-down due to unresolved differences in their proposals.
The major bone of contention had hinged on the percentage of salary increase for certain categories of workers. While Labour’s demand anchors on a 29 per cent salary increase for officers on salary grade level 07 to 14, and 24 per cent adjustment for officers on salary grade level 15 to 17, the Federal Government presented a proposal of 11 per cent salary increase for officers on grade level 07 to 14, and 6.5 per cent adjustment for workers of grade level 15 to 17.
On the side of the Federal Government, It would be recalled that the Minister of Labour and Employment, Chris Ngige, had earlier last month stated that some State governments are not proactive in preparation towards payment of the new minimum wage after finalizing negotiations. The Minister had claimed that the Federal Government is prepared on its side to bring the implementation of the new policy to effect.
Defending the presidency side, Ngige affirmed then that President Muhammadu Buhari had directed the relevant government officials and agencies to expedite actions on the Consequential Adjustment Negotiations on Minimum Wage.
Controversies and chains of effects
One puzzle to be considered is the fact that in the face of the new minimum wage standard, the internally generated revenue (IGR) profile of larger percentage of States in the Country is at a very low ebb with nothing substantial to reckon with in terms of revenue generation. Apart from Lagos (substantially buoyant), Ogun, Kano, some oil producing States, and a few of other States that generate some substantial level of revenue internally, other States having just meagre sources of internal revenue at their disposal to complement the monthly federal allocation are really at risk. A number of these states have been making efforts to wave the burden off their shoulders by trying to directly and indirectly question the new standard as impracticable.
The implication of the newly increased minimum wage standard in the face of static or dwindling federal allocations and poor internal revenue generation, is that larger percentage of the allocation available to the majority of the State Government will be channeled to catering for recurrent expenditures of paying the wages and salaries of thousands of government workers. This further implies that there will be little funds left for the State governments to cater for development of infrastructures which has been a bane across the country. This no doubt will affect growth and economic development with little or no revenue available for productive investment.
The Federal Government before the hasty ratification of the new law should have looked beyond the election to critically put every possible outcome of the demand into consideration to avoid putting the Country into controversy and to save the Country from shame of been seen as a place of shambles without clear cut direction. The same fate of the State also applies to the Federal government. There has not been any recent indication to reflect any possible increment in the revenue profile accruing to the coffers of the federation, and there is no omen of bright prospect from any new revenue generation source in the clamour of diversification giving strong indications that in any short period, Nigeria’s depleted reserves will start revamping. On a similar ground, the Federal Government will also have to be expending more of its revenue on wages and salaries of government workers, thereby increasing the already high rate of recurrent expenditure as against capital expenditure which no doubt will forestall developments in the entire Country.
This might tempt the government to succumb to borrowing which will amount to nothing but further deepening the Country into the mire of debt it is already sinking in, thereby, subjecting the Country to a shaky and questionable future.
Statistics and food for thought
According to statistics from the Debt Management Office (DMO) as at June 30 this year, Nigeria’s debt profile stood at N25.7trilllion. The debt profile of the States and the Federal Capital Territory, FCT, (domestic and foreign) stood at about N5.3 trillion while those of the FG amounts to N20.4trillion.This is a worsening development on the earlier DMO report which reflects Nigeria’s debt profile rose by 2.3% to $81.27 billion (N24.947 trillion) as at March 2019,
In the public data report released for the Q1 of the year, the Debt Management Office said the figure represents N560 billion increase in the total public debt from $79.437 billion recorded in December 2018.
According to the DMO, domestic debt recorded N458.363 billion increase across Federal, States and FCT while external debt increased by N101.6 billion during the same period.
The breakdown of the report reflects thus:
Foreign Debt level
FG + States & FCT only – $25.61 billion
Domestic debt level
FG debt level – $42.72 billion
State and FCT – $12.94 billion
Going by the first quarter frightening figures released by the DMO, out of the total debt stock standing at a humongous sum of N24.947tn as of March 31, 2019, while the debt of the Federal Government debt profile stood at N17, 086tn, that of the states, and the FCT, amounted to N 7,860tn. Reports have revealed that N560bn, out of this, was borrowed in only three months.
It is now reported that Nigeria is currently using about 50% of its revenue to service debts, compared to the average of 17% in other African countries.
The mounting debt profile of the Country is currently at an alarming and mind-boggling rate giving enough warning that any attempt to succumb to further borrowings is an action counter-productive to the future of the Country, only subjecting it to fragility and susceptibility to economic hardship, if not to say selling the Country into future slavery. It has therefore been advanced from various quarters that it is paramount policy makers, political game players and all concerned stakeholders look critically into the danger of their policy decisions in consideration of the future of the Country and come up with not just mere resolutions, but pragmatic measures backed with the necessary political will to drive the resolutions through, with holistic prudence and futuristic concerns.