N30,000 Minimum Wage : The States Must Pay

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Muhammadu Buhari
Onyebuchi  Ezigbo

With the assent by President Muhammadu Buhari to the National Minimum Wage (Repeal and Enactment) Bill 2019 passed by the National Assembly, the battle for the new wage increase has now shifted to implementation. The president’s assent to the bill may have laid to rest several months of agitations and controversies over a new national minimum wage but it has opened yet another struggle, that of the implementation of the minimum wage law.

As the Act prescribed, henceforth, workers in both the private and public sectors will not earn below N30,000 as minimum wage. Furthermore,  the implementation of the National Minimum Wage (Repeal and Enactment) Act 2019 would take immediate effect. The expected impact of the new minimum wage Act is far reaching both in terms of  scope of coverage of the nation’s workforce and the financial implications. According to the minimum wage Act, only employers whose workers are below 25 in number were exempted from complying with the law. The Minimum Wage Act empowers any employee who is paid below N30,000 approved minimum wage to drag his employer to court. In the same vein,  the law also authorises the minister of labour and employment or his nominee to take up such a case on behalf of the affected employee and recover his/her balance. In addition, the  Act mandates the National Salaries, Income and Wages Commission as well as the minister of labour and Employment to serve as the chief and principal enforcers of the provisions of the law. It also gives the workers the right if you are compelled by any circumstance to accept salary that is less than N30,000 to sue your employer to recover the balance and authorises the minister of labour and any person nominated by the minister of labour or any person designated by the  ministry in any department or agency to  take action on your behalf against such employer to recover the balance of your wages.

“It also ensures and mandates National Salaries, Income and Wages Commission and the minister of labour, to be the chief and principal enforcers of the provisions of this law. And this law applies to all agencies, persons and bodies throughout the Federal Republic of Nigeria”. Speaking while announcing the signing of minimum wage bill by the president,  last Thursday,  the Special Adviser/Liaison Officer to the president on National Assembly Matters, Senator Eta Enang, said the effective date of implementation is 18th of April, 2019. 

 States’ Ability

The capability of the states to pay  their workers the N30,000 minimum wage should never be in doubt as they have  huge resources at their disposal to do the needful. The issue at hand should not  be whether  or not the states can pay, what  needs to be urgently addressed is the management of funds by the governors. The state governors  must be fiscally responsible.  Outside the federal allocations collected by the states every month, security votes running into billions, put under the management of the governors are never accounted for. In the interest of fairness and equity, no state worker should go home empty handed at the end of the month when the bank account(s) of his governor continue to swell.  

Given the reported excesses of the state governors, economic analysts are of the view that the state governors must cut down on their security votes with a view to freeing up  the needed funds to cater for the welfare of the workers. Apart from the wasteful spending of security votes, huge resources committed tofrivolous trips and medical tourism by  these governors at the expense of their states, should be channeled to  successfully implementing the new minimum wage bills.

Challenges 

But  with some states presently owing huge amounts as salary arrears and with  their economy genuinely groaning under the weight of  heavy debt burden, it is doubtful if they will be able to  pay.

It is not only the states that are finding difficult to pay, even the federal government and the private sector are going to be facing serious challenges with the implementation  of the new minimum wage bill. 

Nevertheless, these challenges are not insurmountable if they get their acts together.

Governors’ Claim

The enactment of the new minimum wage law will no doubt reignite the conflict between many state governments and their workers.  

Before the minimum wage bill was signed into law, most state governors have rejected it saying that their states cannot bear the extra financial burden.   

The Chairman,  Nigerian Governors’ Forum, Abdulaziz Yari, who canvassed the position of his colleagues in response to the report of the tripartite committee on minimum wage said  the governors are against the N30,000 minimum wage. According to him, the states are going through rough times and therefore lack the capacity to implement the new wage for its workers.  He said the payment of N30, 000 wage was impracticable and may lead to retrenchment of workers in the states. Yari, however, said the states can only take up the challenge of paying the minimum wage  if labour would agree to downsizing of the workforce across the country “or federal government itself accedes to the review of the national revenue allocation formula as well as other measures that will boost the revenue profile of the state governments. The governors had earlier in the heat of negotiations with the labour movement set up a committee headed by the Governor of Kebbi state, to assess the state of finances of most state governments. Although the report of the committee was not made public, it was gathered that the states have made considerable progress in the effort to  improve on their internally generated revenue. It also came up with revenue and expenditure statistics which portrayed majority of the states as incapable of even paying its workers the minimum wage. However, it was evident that despite the money that accrued to the states from Paris Club refund, bailout fund and increased internally generated revenue, some of these governors were still not able to offset arrears of salaries for upwards of six monthly and more.  

Yari said: “Situation where our report was not taken or considered by the tripartite committee in the presentation to the president, then, I don’t know how the committee wants us to work.

“We still said that we want to pay but the issue is the ability to pay. If we say no, just pay, I don’t know how this formula will work and I don’t know how we can get solution to the issue. Today it is N18, 000. In 2015 when the president assumed office, 27 states were not able to pay, not that they chose not to pay.

Now you say N30, 000, how many of us can pay? We will be bankrupt”.

The NGF chairman said from the Forum’s  calculation, it is only Lagos state that will be able to pay 30,000 comfortably. He added that it was the same labour leadership pushing for N30, 000 that would turn around to say that governors did not build any infrastructure “and how are we going to achieve that by paying only salaries”. The agitation by the labour movement was being spearheaded by the NLC which rejected the governors’ position, insisting that states are capable of paying the new minimum wage only if the state chief executives will allow prudent management of resources. The NLC President, Ayuba Wabba, tried to puncture the excuses of the governors that their revenue profile cannot support the implementation of the N30,000 minimum wage,, by blaming them for being extravagant in the expenditure.

Against Governors’ Stand

As expected, the  National Chairman of the All Progressives Congress, (APC), Comrade Adams Oshiomhole, took side with the labour movement  in the  face-off between Nigerian governors and labour unions over the N30,000 minimum wage.

Oshiomhole, who was the President of the Nigerian Labour Congress, NLC, also argued that delaying or refusing to pay workers will hinder the economic development of any state.

He said the governors have no excuse not to implement the new minimum wage, adding that a “labourer deserves to be paid as at when due”.

Rewane Committee

Determined to break the deadlock and to avoid a major showdown with workers, the federal government quickly constituted a Technical Committee to work out means of sourcing revenue to help pay the minimum wage. The committee was headed by the Chief Executive Officer of the Financial Derivatives Company Limited, Mr. Bismarck Rewane.

According to the Minister of Budget and National Planning, Senator Udoma Udo Udoma, the task of the technical committee was to identify additional sources of revenue to pay the minimum wage and the consequential salary adjustment that would follow. The committee was also mandated to identify additional sources of revenue to ensure that the government could meet the increased costs that would arise from the implementation of a new minimum wage without affecting government’s ability to meet the other obligations, particularly with respect to the ambitious infrastructure development plans of the current administration. 

After its deliberations, the technical committee proposed among other initiatives that federal government should take steps to increase the value added tax by 50 per cent.  Since VAC is presently charged at 5 per cent , with the proposed 50 per cent  hike, it will now be 7.5 per cent. Another measure that is being  considered by the government is the removal of subsidy on fuel. 

Both measures being proposed by the technical committee appear not to be popular amongst Nigerians. First, the NLC kicked against the plan saying that fuel price increase will inflict  more economic hardship on the people. On its part, NLC has opposed the idea and cautioned the federal government  against relying on the advice by the International Monetary Fund to remove subsidy on petroleum products. In opposing the idea, the labour movement said that it will result in astronomical increase in fuel price as well as cost of other goods and services.

Wabba said Labour would rather advise the federal government to do something urgently to revamp the local refineries which are presently comatose due to high-level conspiracies.

He said among the agenda normally set for any president that emerges in the country were devaluation of currency,  removal of subsidy, and opening of the country’s borders to free trade..

Wabba said the meaning of fuel subsidy in the understanding of the NLC is nothing but funding inefficiency in the downstream sector.

According to Wabba, the solution to the problem of subsidy in the petroleum industry is local refining of products which will drive down cost products and end the corruption associated with the present subsidy regime.

“ In Nigeria, the removal subsidy is synonymous with price increase and all of us know that the system is shredded in corruption. So clearly, that recommendation is not only faulty it is wrong. NLC consistently  what needs to be done is to refine products for domestic use. So naturally, you will kill subsidy and corruption. And do what IMF is prescribing is to transfer the corrupt tendencies of the so-called subsidy now to the citizens.

 Wabba said the fact of the matter is that Nigerians are so impoverished that any price increase certainly cannot be pushed down the throat of every Nigerian and so let tell our government that they should weary of this decision,” he said. According to NLC scribe, the issue of whether there is indeed fuel subsidy or not  was raised by President Muhammadu while campaigning in 2015 but the question has not been answered. 

“We are actually collaborating what the president said in the past that subsidy is corruption. Who subsidising what? This has remained the position of the NLC for many years,” he said.

Wabba who argued that refining the crude locally was not rocket science, said that the NLC will soon submit a documented position on how to solve the troublesome issue of fuel subsidy in the country.” 

NLC had consistently said that it is opposed to deregulation of the downstream sector of the oil industry but that the nation’s refineries must be up and running and that federal government should promote local refining capacity rather than depend on imports. Additionally, the labour movement said that nothing is wrong with the country’s refineries other than conspiracies by those who are beneficiaries of the fuel subsidy scam.

“ There is nothing wrong with our refineries, the existing refineries can be upgraded from one capacity to another. Even the four refineries that we have, if the service are upgraded they serve the entire West African sub-region and beyond but because it pays more for corrupt tendencies, that is why we prefer importation than refining products locally for domestic use”.

Similarly, the  proposed increase in VAT attracted the attention of no less a person than the national leader of APC, Bola Tinubu, our season who  criticised  it on the grounds that it is going to inflict economic hard ship on the people. With Tinubu joining other Nigerians to oppose the hike in VAT, it may mean that the APC- led administration will not want to go against his advice.

Labour’s  Demand

Having scaled the hurdle of getting the minimum wage bill signed, NLC and other labour centres will now be launching another struggle for the implementation of the wage increase. According to the Head of Information and Publicity, Mr. Benson Ukpah, labour expects  implementation of the new minimum wage to commence immediately.

He said: “We are delighted by the signing of the new minimum wage Act by the president. We commend him for it and urge for the immediate implementation of the N30,000 minimum wage considering that the matter has been pending for so long.

“We urge various governments and employers of labour to commence immediate implementation with arrears.”

Chaos

However, a former Minister of Information, Prince Tony Momoh, expressed  fear that the new N30,000 minimum wage would lead to chaos. Momoh, a chieftain of the ruling APC reportedly made the statement while addressing newsmen on Friday in Abuja as part of activities to mark his 80th birthday.

While he was happy over the new wage, he held the view that it will lead to a situation where many states will not be able to pay and this will lead to industrial unrest and strikes.

 “Minimum wage is not a living wage. My prediction is that the N30,000 minimum wage will cause chaos because many state governments that were paying N7,500 before N18,000 was introduced could not pay then.

“A lot of them are currently finding it difficult to pay N18,000 now. They are already saying they can’t pay and this will lead to strikes. When that happens, the nation is in trouble.

“The N30,000 minimum wage is not a living wage. What is the percentage of the workers in Nigeria that are entitled to the N30,000 minimum wage? What is the percentage of the public servants compared to the percentage of the entire working population in Nigeria?”

Private Sector 

Most often,  it is taken for granted that the national minimum wage is directed at government workers alone without also ensuring that the employers of labour in the private sector implement the minimum wage. While it may be true that most of the private sector entities are already paying the staff above the minimum wage, it is important to note that a lot other employees in the private sector are usually shortchanged by the management of the private  companies where they work.

States currently owing its workers salary arrears in excess of three months may not cope with additional burden of the increased wage bill. For instance, in the north, only states like Kano, Kaduna, Kebbi, Sokoto and perhaps, Gombe could  boost of not being in heavy arrears of workers’ salaries. For the south, where the states are said to be economically strong,  many of them still owe arrears of workers’ salaries and will most likely struggle to pay the new minimum wage. Such states like Osun, Ondo, Imo, Ebonyi, Ekiti, Oyo and Cross River may find it difficult to pay the new minimum wage.

On the whole, one can say the assent given to the new minimum wage bill by Buhari may remain a good political move meant to placate the teeming impoverished workforce in the country, allowing peace to reign, especially at the most critical period of the general election and its aftermath. More importantly, the belief in some  quarters is that, if something is done to find a mutually acceptable means implementing it, the new minimum wage may be the soothing balm to the plight of workers across the country.