By Afe Babalola
Last week I examined the recent efforts by organised Labour to get the Federal Government of Nigeria to increase the National Minimum Wage from its current position of N18,0000. After several weeks of consultations and threats of strike action, government and labour appear to have agreed to an increase to N30,000 though that agreement is now threatened by several state governors who have stated their inability to pay the proposed amount. It is for this reason that I question the rationale behind the current position by which only the Federal Government can legislate on a National Minimum Wage. For the avoidance of doubt, item 34 of the Exclusive Legislative List contained in the Second Schedule to the Constitution of the Federal Republic of Nigeria 1999 (As Amended) reads as follows:
“Labour, including trade unions, industrial relation; conditions, safety and welfare of labour; industrial disputes; prescribing a national minimum wage for the federation or any part thereof; and industrial arbitrations.”
Thus, from the above, it is beyond dispute that only the National Assembly can make laws relating to the issue of a national minimum wage. Should this however be so? I do not think so. As Nigeria operates a Federal System of government, made up of states with varying standards of living, I consider that the issue of national minimum wage should not be limited to the Federal government alone. Nigeria should operate the system that operates in some other countries such as China which delegates the power to determine minimum wages to the Local governments or provinces or the United States which operates a hybrid system in which the Centre and the States share legislative powers with regards to the national minimum wage. The advantage of either system is that it allows for local peculiarities to determine the most appropriate minimum wage for each state. Describing the positions in China and the United States respectively, Wikipedia states as follows:
“As different parts of China have very different standards of living, China does not set one minimum wage for the entire nation. Instead, the task of setting minimum wages is delegated to the local governments. Each province, municipality, or region sets its own minimum wage in accordance with its own local conditions. According to the country’s Employment Promotion Plan, minimum wages are supposed to increase in accordance with local living standards by at least 13 percent through 2015 and be no less than 40 percent of the average local wages. Minimum wages under such policies increased by an average 12.6 percent rate between 2008-2012. However, the growth rate of minimum wage levels decreased in 2016, reflecting the Chinese government’s effort to reduce pressure on enterprises resulting from the uneven growth between labor costs and production rateates
The minimum wage in the United States is set by US labor law and a range of state and local laws.Employers generally have to pay workers the highest minimum wage prescribed by federal, state, and local law. Since July 24, 2009, the Federal Government has mandated a nationwide minimum wage of $7.25 per hour.As of January 2018, there were 29 states with a minimum wage higher than the federal minimum.From 2017 to 2018, eight states increased their minimum wage levels through automatic adjustments, while increases in eleven other states occurred through referendum or legislative action.
Different standards of living across the states in Nigeria
Without a doubt, the cost of living varies across the states. While States such as Lagos, Imo, Cross-River, Rivers and the Federal Capital Territory (FCT) rank as expensive cities to live in, States such as Ekiti, Ogun, Oyo, Kwara, Benue and Kaduna have relatively lower costs of living. While the average cost of renting a three-bedroom flat in the central areas of the FCT is put between N1.5M to N2M, the same amount will be sufficient to purchase a plot of land in a sufficiently developed area in states such as Oyo and Kwara. While only a select number of Lagos residents can afford to live in areas such as Ikoyi and Ikeja Government Reservation Areas (GRA) the same cannot be said of Iyaganku or Onireke areas of Ibadan, with similar layouts but which are open to more members of the public due to the lower costs of living. This also applies to other aspects such as food, transportation and even cost of education. What this all comes down to is that the local peculiarities vary from place to place. Thus a National Minimum wage prescribed at the Centre via federal legislation may not adequately address local realities.
Again I must make the point that I am not unmindful of the fact that by law, all that the states are required not to do, is pay below the minimum wage and therefore some states can and indeed pay wages slightly above the minimum wage. It may therefore be argued that the current situation adequately leaves room for state governments to take into consideration those very local peculiarities in determining just how much more they can pay above the nationally prescribed minimum wage. However, what the current situation does not provide, is adequate room for Labour to actively engage the State governments in making that determination. In other words, the system which I advocate is one in which Labour would be able to negotiate directly with individual state governments, using local indices, in making a case for not only why the minimum wage in Lagos State for example, should be higher than the national minimum or that of Ekiti but also the quantum of the difference.
Able to make rational inputs
In such a scenario, Labour and indeed the state governments would be able to make rational inputs into the debate as to what each worker in a locality should receive as pay. At the moment this is not the case. If critically examined, it would be seen that by the current system, workers are in reality shortchanged. As stated earlier, what may be adequate as minimum wage for a worker in Kwara State may be totally inadequate for a worker in Lagos State or the Federal Capital Territory.
This again, invariably brings up the issue of restructuring of the country. I am aware that when the issue of restructuring is brought up, many who oppose it, wrongly point to what they perceive as difficulties in achieving a geographical restructuring of the country. However, as I have reiterated several times, the issue of restructuring goes beyond issues of geography alone and in reality involves several other issues and questions inclusive of what matters the states should have legislative competence over, minimum wage ,which I have identified here, being just one of many. I therefore advocate an amendment to the Constitution moving item 34 of the Exclusive Legislative List to the Concurrent Legislative List.