AKIN ADEWAKUN examines the ongoing impasse between the Federal Government and Labour unions over a new minimum wage. He explains that while the demand for a new minimum wage is justifiably expected against current socio-economic realities in the country, the contending groups must agree on a decision that will not further push a wobbly economic structure to collapse.
THE managers of the nation’s economy and organised labour have been warned of the impending doom that awaits the economy if the issues surrounding the ongoing minimum wage are not properly dealt with.
Giving the warnings in their different reactions to the prolonged labour issue, the stakeholders comprising finance and public affairs analyst, the organised private sector and the business advocacy group, stated that, if not well handled, the nation’s economy might witness hyper-inflation; with too much money likely to be in circulation to chase very few goods.
They also counselled on the need to be more flexible on the issue so as to make it a win-win situation for labour, the government and the economy, warning that no amount of increment would be enough to assuage the economic needs of workers at this time.
In the past few months, the organised labour and the federal government had been at daggers drawn over what should be the right minimum wage for the Nigerian worker, culminating in a two-day industrial action of June 3rd and 4th this year, which saw critical facilities of government shutdown, and the nation’s economy grind to a halt.
But, while the federal government is insisting on a minimum wage of N62,000, and organised labour threatening a ‘no retreat, no surrender’, if its demand of a ‘living wage’ of N250,000 is not acceded to by the national government, some state governors have simply shot down such N62,000 proposal by the federal government, on the excuse of ‘dwindling’ resources which make it impossible for them to pay the new amount.
Interestingly, the Organised Private Sector of Nigeria (OPSN) is not left out of the conundrum either, since the minimum wage represents the wage no employer should pay below, either in the private or public sector.
Not a few Nigerians are therefore concerned about where these agitations by the organised labour are likely to leave the economy, and Nigerians in general. Would such a humongous demand by labour, if accepted by their respective employers, not nail the coffin of the ailing nation’s economy? Some have asked.
Interestingly, a critical stakeholder in the nation’s economy, the organised private sector shares some of these concerns. The sector, comprising Nigeria Employers’ Consultative Association (NECA), Manufacturers’ Association of Nigeria (MAN), National Association of Chambers of Commerce, Industries, Mines and Agriculture (NACCIMA), National Association of Small Scale Industries (NASME) and National Association of Small Scale Industrialists (NASSI), believed if not well handled, the issue might spell doom for the nation’s economy since many businesses, incapable of paying the wages might be forced to close shop, with its attendant job losses and a significant cut in government revenue.
Rather than insisting on a humongous wage, which businesses and government would have to break the banks’ vaults to meet, the OPSN urged the organised labour to look beyond the national minimum wage and channel its efforts towards achieving sustained economic growth.
Speaking on the issue, on behalf of the sector, the Director General of NECA, Adewale-Smatt Oyerinde, stated that OPSN believed the minimum wage negotiation should be approached with the current economic realities, regarding the need to protect jobs and ensure sustained growth playing a paramount role.
He explained that the tripartite committee was set up to negotiate a new National Minimum Wage and not a living wage, nor inaugurated to adjust salaries.
“The minimum wage is the wage that no employer should pay below, either in the private or public sector,” he stated.
Oyerinde explained that OPSN’s position on the issue was informed by the need to arrest the ongoing job losses and continuous shut-down of businesses in Nigeria, noting that jobs can only be guaranteed when businesses are alive and sustainable.
The NECA boss stated that, while it is within the right of organised labour to embark on any action it deems fit and necessary to achieve its objectives, organised businesses will also, within extant legislation, do all that is necessary to protect enterprise sustainability and jobs.
According to him, organised businesses are currently faced with multidimensional challenges, ranging from multiple taxes, levies and fees, astronomical power costs, rising interest rates and exchange rates, amongst many others.
He, therefore, described the offer of a 100 percent increase in the National Minimum Wage as sacrificial on the part of the organised private sector.
“While it is important to note that socio-economic conditions over the years have rendered the N30,000 minimum wage inadequate, the same conditions have also incapacitated many businesses, fatally, affecting their sustainability and ability to pay,” he stated.
Oyerinde, therefore, believed the demand by organised labour at this period has the potential of crippling small and medium enterprises and pushing many other businesses into comatose.
The OPSN’s mouthpiece therefore stressed the need to strike a balance between workers’ needs, the current economic situation, ability to pay and productivity. He believes an astronomical increase, being demanded by labour, will make compliance practically impossible, since many state governments and local government areas are still unable to pay the N30,000 per month wage.
In the alternative, OPSN would want the government fast-track the implementation of its interventions to make life more bearable for workers, businesses, and Nigerians in general, noting that any disruption of organised businesses’ activities could have serious consequences on job security and the sustainability of businesses.
“Businesses need to be alive and stay sustainable for jobs to be created and for the government to generate taxes,” he stated.
Be more flexible in your demands —LCCI
The views of another critical stakeholder, the LCCI, on the issue, seem to be in tandem with the above position.
Speaking on the vexatious issue, the LCCI would want the nation’s organised labour to be more flexible in their demands.
The chamber, through its Director General, Dr Chinyere Almona, urged the labour unions to consider labour productivity, supported by infrastructure, rather than high wages with weak productivity.
It also appealed to all parties to consider a wage that reflects a good balance of economic realities, affordability, and sustainability.
According to the group, the federal government’s proposal represents a significant increase, aimed at improving the livelihood of workers across Nigeria, and, as a result, imperative to acknowledge the fiscal constraints and economic challenges facing the various state governments.
“Some governors under the Nigerian Governors’ Forum have already indicated their inability to meet the initially proposed higher minimum wage, citing budgetary limitations and the potential risk to essential public services,” it stated.
The chamber, therefore, urged all parties to consider a wage that is within the financial capacity of both federal and state governments, since this, it added, will help maintain economic stability and prevent potential layoffs or cuts in essential services.
While calling for the adoption of a wage that supports long-term economic sustainability, the chamber also argued that over-extending financial commitments could increase borrowing and debt, and adversely affect the nation’s economy.
“We can avoid a situation where we force a wage on government and businesses, which will eventually lead to job losses, worsened poverty levels, and so much money chasing few goods,” Dr Almona stated.
The chamber therefore called on labour to consider the government’s offerings and be concerned about how private businesses can afford to pay the set wage without considering shutting down operations or cutting jobs.
“Beyond the new minimum wage, the chamber is more concerned about having a more productive economy with a robust infrastructural base supporting the economy,” it stated.
The business advocacy group also urged the government to consider the implementation of special non-cash interventions that will see businesses spend less on production, remove the import duties on food imports and critical raw materials and drastically reduce the import duty exchange rate on agricultural input and other imports that have multiplier effects on prices.
It also called for an aggressive metering programme on power supply, and more investment and regulation in the sector to boost power supply through more contractual discipline and gas supply guarantees, while also building infrastructure to support local production of essential medicines, and more spending to upgrade the nation’s public health facilities.
“With the government’s commitment to providing these support systems to Nigerians, low-income earners will spend less on these expenditure heads and have a better living standard in the long run,” the chamber stated.
But a finance expert and public affairs analyst, Mr Biyi Adesuyi, would rather attribute this perennial labour issue to the nation’s refusal to practise true federalism, noting that such negotiations should not be unitary in nature, but handled by the different federating units.
“Nigeria is not running a true federal system. In a true federal system, the minimum wages of sub-national governments are not the same. For instance, the minimum wage paid in New York State is different from that of Hawaii in the United States.
“In the First Republic, the Western Region’s minimum wage under Chief Obafemi Awolowo was higher than the Federal Government’s minimum wage paid by Prime Minister Tafawa Balewa,” he stated.
Adesuyi, who is the Chief Executive Officer of Wealthgate Advisors added that each state should negotiate its minimum wage separately with the labour unions, according to its economic capacity.
“Lagos State and Zamfara State cannot and should not be forced to pay the same salaries for workers and political office holders,” he stated.
Adesuyi was also quick to submit that no amount of wage increment would solve the current economic crisis labour and Nigerians are presently facing in the country.
He argued that rather than the frequent calls for increment in wages, the concerns of stakeholders should be on how the government would bring down inflation, considerably, to enable the least-paid worker to buy basic things like food, accommodation and healthcare for his family.
“Even if the minimum wage is N200,000 and the necessities of life become unaffordable, the increase in the minimum wage will be a futile exercise. And, at the end of the day, we will be toying with hyper-inflation,” he added.
On the probable implications for the nation’s small businesses, the finance expert argued the impact might not be significant since most SMEs don’t play by the rule when it comes to the issue of minimum wage.
“From my experience as a banker, SMEs don’t pay the minimum wage. Most of them, especially the ones owned and managed by Asians, pay wages that are below the stipulated minimum.
“Surprisingly, the NLC and TUC don’t fight the Chinese and Lebanese who treat Nigerian workers like slaves. I think the labour ministers have failed Nigerians in this aspect over the years,” he stated.
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