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National Mimimum Wage and peculiarities of the localities (1)

By Afe Babalola

A few weeks ago, the organised labour announced its decision to call out workers on a nation wide strike to press home the need for an increase in the national minimum wage which as at today is fixed at N18,000 under Section 1 of the The National Minimum Wage Act Cap. N61 Laws of the Federation of Nigeria, 2004 (As Amended). The section for the avoidance of doubt reads as follows:

Employer to pay minimum wage

(1)  As from the commencement of this Act, it shall be the duty of every employer (except as provided for under the principal Act as amended) to pay a wage not less than a national minimum wage of N18,000.00 per month to every worker under his establishment.

The decision of labour was said to have been based on the refusal of government to accede to a previous agreement for an upward review of the minimum wage to the sum of N30,000. In the statement announcing the strike, the Unions stated as follows:

 

Labour

“It has become imperative at this time that Nigerians recall the events that led to the last nation-wide strike which forced the federal government to return to Negotiation table that they had earlier abandoned. Nigerians should not forget the promises made by the same Government while pledging to return to the negotiation table leading to the suspension of the strike action…It is not true that we proposed N30,000 as the new national minimum wage. It is also not true that the committee did not agree on a figure during its last sitting. We accepted N30,000 as a compromise to demonstrate the willingness of Nigerian workers to make sacrifices towards nation building…If nothing is responsibly done by the federal government to meet our demands, on Monday, the 6th day of November, we shall embark on a nation-wide strike to compel this government to show more sensitivity to the plight of Nigerians and the suffering that is decimating our people on daily basis.

However, following last minutes meetings, the strike was called off thereby saving Nigerians the hardships that strikes have come to represent over the years. Regrettably, it appears that things are far from settled. Hours after the strike was called off, divergent accounts emerged as to what exactly had been agreed between labour and government. While the Unions stated that the agreement was for N30,000, some government officials insisted that the said amount was simply a recommendation which government was still at liberty to reject. Luckily President Buhari was latter announced to have agreed to the sum of N30,000. Again just as Nigerians began to celebrate the victory recorded by Labour, the governors added another discordant tune when they argued that payment of the proposed new minimum wage would be practically impossible and would as a matter of fact, cripple most states which at the moment find the payment of salaries based on the existing minimum wage to be a real struggle. Speaking out on the issue, the Governor of Ebonyi state declared emphatically that 95% of the states would be unable to pay the proposed minimum wage. He was reported to have stated that:

We’ll not vote for governors who refuse to pay N30,000 — PENSIONERS

“The federal government collects 52 per cent of the revenue from the federation account and when I tried to put the N30,000 figure to Local Government Areas (LGA) it means they will borrow N1billion to add to their allocation, in paying salaries.I will definitely not be a governor to govern such a state and will never preside over a state that will allocate 100 per cent of its earnings to pay salaries…There is no governor or political office holder that signs cheques but civil servants as the country’s leaders and labour are just putting water inside a basket and praying God to hold it with this minimum wage issue,…We should determine how much should be allocated to education, health, infrastructure among others if 100 per cent of earnings are used to pay workers salaries…Many states are experiencing various problems and cannot pay salaries but the people condemn their governments over their inability to provide good roads and other amenities.

Confirming this view, the Governor of Ekiti State a few days ago stated that the State would require an additional 2 Billion Naira per month to be able to pay 30,000 as minimum wage.

Without a doubt, many states have since the drop in oil revenue accruing to the federation which in turn led to a drop in the allocation to the states from the Federation account, struggled to pay salaries. Such was the extent of the problem that a bill was introduced on the floor of the House of Representatives last year titled; A Bill for an Act to Prohibit Late Payment, Non-Payment and Under-payment of Workers’ Wages, Pensions and other Emoluments in Nigeria and Prescribe Penalties for Violations and other Related Matters. It was in my estimation, one of the most well intentioned bills conceived in modern times in Nigeria. According to its sponsor, Honourable Femi Gbajabiamila of Lagos State, the bill was designed to ensure that every employer of labour whether private or public pays the wages, salaries, pensions and all benefits of its workers workers promptly without any delay weekly, fortnightly, monthly, quarterly as may be agreed by parties in the contract of employment of the individual employee. That Bill unfortunately was withdrawn by the sponsor to allow for further consultation.

However, with the current situation, there is an imminent face off between labour and the federal government on the one hand and labour and the state governments on the other hand. While labour is grappling with the Federal Government to ensure that the decision of President Buhari to accept N30,000 becomes a reality by an amendment to the existing provisions of The National Minimum Wage Act, Labour must contend with the State governments who insist that they cannot pay the sum of N30,000 as minimum wage. This development therefore necessitates that all parties involved take the time to study the issues revolving round what should be the minimum wage in Nigeria and in my estimation, one of those issues is whether it is really practicable to have the minimum wage determined or set only at the national level as obtains in Nigeria. In other words, questions must be asked as to why the national minimum wage is set by the federation when in reality economic realities differ across the states which are required to implement the said minimum wage. Would it not be better if each state is allowed, taking into consideration factors peculiar to it, in determining what it can or should pay as minimum wage? In stating this I am not unaware of the fact that what The National Minimum Wage Act prescribes is a minimum below which no employer can pay and that therefore states can and in some instances, do pay above the prescribed minimum. However what I propose is a system in which the issue of wages is moved from its current spot on the exclusive legislative list to the concurrent list enabling state legislatures to also pass laws on wages. The immediate advantage of this, as I will show next week with examples from other countries, is that labour will be able to discuss directly with state governments thereby bringing about a situation in which wages payable in a locality will reflect the peculiarities of that locality.

To be continued.


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