The Nigerian Labour Congress the major trade union of Africa’s largest economy, on Tuesday November 6, 2018 suspended its planned nationwide strike. Comrade Ayuba Wabba the President of NLC speaking on the strike said the decision was borne out of the need to prepare for fair and reasonable engagement with the Federal Government, to address the key issues that led to the industrial action.
In this blog we take a look at the issues around the strike, new minimum wage and the legislation. From an economic perspective, increasing the minimum wage drives household consumption across the country and produces room for investments. It could also affect employment as the government will be looking at their wage bills across the three tiers (Federal, State and Local) particularly at a time when there are challenges in revenue.
Some States have experienced challenges in paying the N18,000 minimum wage and analysts are worried about how they will cope with the new wage. There will be tough choices ahead for the Federal Government who from the political-economic angle will not want labour issues as the 2019 general elections approaches. As the NLC and the Federal Government meet, President Muhammadu Buhari eventually agreed to labour’s demand of N30,000 after union leaders made it clear that anything below that would lead to national shutdown.
Although, expectations are that there will be a realistic engagement with the states and national assembly with an executive bill to be presented that will take into consideration the economic realities in the country.
On one hand N18,000 is no longer tenable for the workers in Nigeria, while on the other leg the N65,000 minimum wage should be negotiated to a level that all Federal and States can apply with clear timelines. In this regard the Federal Allocations Accounts Committee (FAAC) principle will have to be reviewed to empower the States, currently the Federal has 52% share, States 27% share and Local Governments 21% share. This will enable wage adjustment to be part and parcel of the economic management process. Indeed, that was why the Wages and Salaries Commission was set up.
Notwithstanding what happens eventually at the end of the wage imbroglio, the debate will almost invariably shift to the saner and more practical issue of which state can or cannot pay. About 30 of the country’s 36 states record miserable internally generated revenue (IGR) that is so low as to be practically useless for the purpose of meeting small and sundry basic state needs, let alone salary bills.
The implication is that they all unreasonably depend on their portions from the federal allocation to meet salary and developmental needs. It is simply untenable in the short or long run. While many states do in fact demonstrate no understanding of how to meet the needs of their workers, nor why those needs ought to be met, the NLC itself has been indifferent to arguments that seek a better understanding of state economies and the structures that would make regular and decent wage payment sustainable.
The unions appear to have forgotten that negotiations raised minimum wage to its present unsustainable level, and that a raise, when it is coaxed from the government, does not necessarily make wage payment foolproof, as everyone now knows. Even if an agreement is reached on what is fair, there is nothing in the states to indicate that it can be paid on a sustainable basis.