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Dry your crocodile tears and pay minimum wage

by Business News Report

By Omoh Gabriel
Nigeria is peculiar in several respects. There are several anomalies and politicians hide under this cover to deceive the people. The question of minimum wage has been raging with some states governors saying they can not pay the N18, 000 prescribed by the law.

The governors have argued that states that receive about N2.5 billion from the federal government were being expected to pay about N4 billion to workers as minimum wage. Rotimi Amechi, River state governor, who is the current Chairman of the forum, told journalist that governors cannot pay what they do not have. We are willing to pay, but they are trying to see how much they can negotiate with the federal government on issue of revenue allocation so that they can have more money to be able to pay, he said.
If you receive N2.5 billion as monthly allocations, where will you get N1.5 billion to add to pay the new minimum wage? Amechi said governors had agreed to partner with President Goodluck Jonathan, the Revenue Mobilisation and Fiscal Allocation Commission, and the National Assembly in driving the change in revenue allocation formula.

The current 18,000 minimum wage is far less what the minimum wage was pre-SAP. Before 186 when the structural Adjustment Programme was introduced, the minimum wage was about N250. At that time the exchange rate of the naira to the dollar was N1.6 to the dollar. The N250 was about $400. By today’s exchange rate of N155 to the dollar, $400 will amount to N62, 000. In fact, the minimum wage should be in this neighbourhood. But it has been negotiated to N18, 000 and yet Governors are saying they can not pay
All the state governors are aware that labour law in Nigeria is in the exclusive legislative list. Nigeria claim to run a federal system of government where the component states are supposed to have some measure of autonomy but the way Nigeria handles fiscal matters puts a lie to this claim.. In fiscal terms, Nigeria operates a unitary system where all the revenue are collected and shared from one source- the federation account. Ordinarily in wage negotiation each employer of labour is supposed to negotiate the minimum wage with their employee. In this case states ought to have negotiated with their workers. The negotiation was centralized and concluded, the governors after the agreement was reached are now saying they can not pay.
In the ongoing debate, the minimum wage was a negotiated amount between labour, federal authorities, state governments, the organized labour and the private sector represented by NECA. All parties to the negotiation were said to have been represented at the negotiation. Many of the state governors crying wolf now were said to have disclosed that they can pay as much as N20, 000 when labour was demanding N52, 000 per month. It was representatives of the organized labour that compelled the negotiators to accept N18, 000 as the minimum bench mark as it was agreed that any firm employing 50 and above workers must pay the amount.
Why then are these governors insisting they can not pay now that the law has been passed? If all political appointees be they commissioners, special advisers etc in all the states receive uniform pay, why will workers case be different? Why have the Governors waited for this long, after twelve years of continuous democracy, to realize the need for true fiscal federalism? State governors must learn to respect Nigerians and do the needful. It is common knowledge that a number of them have huge sums budgeted as security vote that is never accounted for year in year out. Would it not be better for them to reduce the security votes and pay their workers a living wage?
Apart from security votes that are wasted every year, the governors also have political appointees most of whom do not add value to governance . Hefty sums are wasted on on fleet of cars, fuel allowance, domestic servants, gardeners etc. Are these governors not thinking of reducing this burden in order to bring down the cost of governance?
What is the whole thing about minimum wage? A minimum wage is a price floor put on wages to stop them from falling below some legislated level. The Minimum wage debate has pitched workers against government in this instance. In economics parlance labour usually come together to form a union. And a union is an organisation of workers selling their services collectively. Understandably unions have many goals, primary of which is higher income for members which is becoming less important.
Recently emphasis has been on employment security. There are many methods of achieving higher wages. In Nigeria the over 40 workers unions in the country are mostly government workers not private sector ones. As of today not up to 60 per cent of private sector employees are unionized whereas in the public sector close to 90 per cent belong to unions. The question is what happens to those Nigerian workers that are not members of any union, the daily paid workers, labourers, and domestic staff. How will they benefit from all of this? Are the President and the Governors elected to cater for the interest of their workers? What about others members of the society how will they be paid the minimum wage?
It is worthy of note that public sector unions are much less subject to market discipline and foreign competition than their counterpart in the private sector . Many of the public sector workers can not survive in a disciplined work place. There is a lot of absenteeism, indolence and low productivity among the average public sector workers. The minimum wage was not arrived at as a result of increased productivity. It is just an award, a reward by law and negotiations. What the public sector workers have going for them is that strikes call by their unions, as providers of essential services, have a harsher effect on the economy than that of a private firm with competitors. It is the public sector that will bear the brunt of the crunch hence they can hold government to ransom. It is time that the Nigeria nation wake up to the current reality that the only way forward is a true fiscal federalism where states can negotiate wages with their employee.

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