CHRISTIAN APPOLOS writes on how the removal of fuel subsidy strengthens the agitation of workers for decent pay.
The pronouncement “Fuel subsidy is gone” by President Bola Tinubu on May 29, 2023, during his inauguration, was a tsunami that instigated a new phase of economic challenge across the nooks and crannies of Nigeria. Within 24 hours after the statement, the price of fuel went off the roof, exacerbating the prices of other goods and services.
At the receiving end of the consequences of the policy are the Nigerian workers and the masses. Transportation, food items, healthcare, housing and everything else human beings live on became a heavier burden to bear.
Thus, the policy forced every citizen in the country to adopt various austere measures. For the Nigerian worker, the economic hardship caused by the effect of the policy ripened the time to demand a living wage. Their argument is that the existing minimum wage is meagre for anyone to survive on with current economic realities.
Lending credence to the argument of workers vis-a-vis the reality on ground is a former Deputy Director, Productivity Measurement and Labour Standard at the Ministry of Labour and Employment, Mr Godson Ogbuji.
At a post-May Day conference organised by the trade unions in the aviation sector last week, Ogbuji said, “Minimum wage is one of the most used instruments (policy) for effecting the wage distribution on the labour market. However, because of its potential distributive effect, setting a minimum wage as a matter of policy is a contentious political issue and subject of controversies among the government, workers’ and employers’ organisations. Nigeria’s experience is no exception.”
He added that the direct effect of government policies has instigated among Nigerian workers the question on whether they should earn a minimum wage or living wage. And that the result of that question led to their demands for a living wage and not a minimum wage.
Ogbuji said, “The process of evolving an enduring pay structure and incomes policy in the country started with the first general wage increase in 1945 and followed with the setting up of different commissions from 1963 to 1999. At the inception of democracy, the President Obasanjo administration initiated a substantial increase in 2000 and the monetisation package whose implementation started in 2003 across the public service.
“In 2011, under President Goodluck Jonathan, a new national minimum wage of N18,000 came into effect until the 2019 review under President Muhammadu Buhari when it was raised to N30,000. The next review ought to have commenced in April 2024. However, the negotiation, horse trading is still ongoing. Workers are watching with high expectation and optimism that the outcome of all these between government, the organised labour and employers will result in a ‘living wage.’
“Over the years or decades, no government has laid emphasis on ‘living wage’ in Nigeria rather, they determine minimum wage using the subsistence margin.
“We are witnessing a drastic departure from determining a minimum wage using the subsistence margin approach to a more robust discussions, negotiations and debates around living wage. It is a healthy development and a pathway to achieving a living wage for Nigerian workers.”
Ogbuji averred that to effectively address workers’ demands, there is the need to ascertain the difference between minimum wage and living wage. He said, “To begin with, wage is defined as a fixed regular payment earned for a work or service rendered. Minimum wage is the smallest amount of money that employers are legally allowed to pay someone who works for them. The implication is that Nigerian workers have been receiving the smallest amount allowable by law, nothing more, nothing less. Is this fair? Hence, Mr President’s commitment towards ending the era of Nigerian workers waiting for a ‘living wage’ is a welcome development.
“A living wage is a wage sufficient to provide the necessities and comfort essential to an acceptable standard of living. The concept of living wage is not new, the Standard of Living Theory of Wages was propounded in the late 19th Century and refined the Subsistence Theory of Wages. It related the wages of the workers to the standard of living and stated that wages should be determined by the standard of living of the workers and not by subsistence margin. In other words, any decent living wage must align with prevailing economic realities and exigencies of the time.
“The ILO alludes that a ‘living wage’ connotes the idea that wage levels should be sufficient to enable workers who earn them afford a decent minimum living standard. Thus, living wage hinges on the ILO’s fundamental part of the Agenda for Social Justice and an essential objective of wage policy.”
Ogbuji also noted the timeline of subsidy removal attempts by successive governments and the import of the eventual removal of fuel subsidy in May 2023 on the economic power of Nigerian workers, leading to the agitation for living wage.
He said, “Previous governments made spirited attempts at subsidy removal and severely reversed them. In 1999, President Olusegun Obasanjo attempted to deregulate the downstream sector of the oil industry, including removing fuel subsidies. Due to public resistance and protests, the plan was abandoned. The story was the same in 2012, when President Goodluck Jonathan announced a partial removal of fuel subsidies, which led to a sharp increase in fuel prices. The move resulted in one of the most mammoth protests in Nigerian history.
“Eventually, the government bowed to pressure and rescinded its decision. While complete removal has not occurred since 2016, successive governments have discussed and considered subsidy reforms and, rather, found alternatives to address the fiscal challenges associated with the subsidy regime.
“However, in May 2023, after his swearing in as the president of the Federal Republic of Nigeria, President Bola Tinubu made the famous but courageous declaration that ‘fuel subsidy is gone.’ This declaration marked the beginning of a new phase in the lives of Nigerians and the workers in particular. As a matter of fact, it changed the national narratives and these narratives have continued to date resulting in the agitation for a ‘living wage’ for Nigerian workers by the organised labour. The discussion is still on and the expectation is very high.”
On the direct impact of subsidy removal on Nigerian workers, he said, “Government policies are meant to achieve either short, medium and/or long term objectives. In this circumstance, the policy is meant to achieve a long term objective. Hence, Mr President has continued to admonish Nigerians to exercise patience or endure the short term pains of this policy for its long term benefits and prosperity.
“However, the impact of the subsidy removal on Nigerian workers has been quite excruciating. This includes declining national workforce productivity with its huge implication on national economic recovery effort. Most Nigerian workers have become insolvent wage earners; increasing mental distress resulting in domestic violence, fractured family relationships; inability to shoulder simple family responsibilities; rising costs of living. Prices of food items are no longer predictable. Most Nigerian workers have joined the class of multi-dimensional poverty; saving power of Nigerian workers has been eroded; high rate of corruption/bribery.
“Other impacts of the removal are: high cost of transportation, soaring inflation rates. As of March this year, the inflation rate stood at 33.20 percent, currency fluctuations, hike in fuel prices.”
Ogbuji also recommended steps the government can adopt to cushion the effect of the fuel subsidy policy. He said, “At this critical point in the lives of Nigerian workers, government at all levels must make concerted effort to: accelerate and conclude negotiations on the new living wage for Nigerian workers, launch 2,700 CNG-powered buses for Nigerians and workers, fulfill other promises made by the administration to cushion the negative effects of the subsidy removal, review welfare packages hitherto given to workers by the MDAs in the face of the present economic realities and hardships, push down the soaring inflation rates in order to make sense of every effort by the government to address the present economic hardship in the land, social dialogue must be institutionalised to address emerging issues as we pass through this ‘wilderness experience.’ Crisis will not help in times like this.
“Nigerian workers are very optimistic that the ‘Renewed Hope’ agenda of Mr President shall come to pass through the new national living wage, thus ending the years of perpetual financial hardship and inequality suffered by Nigerian workers.”
ALSO READ: Electricity tariff hike: Nigerians are suffering – Kogi NLC
