Director-General of Nigeria Employers’ Consultative Association (NECA), Adewale-Smatt Oyerinde, in this interview with GLORIA NWAFOR, speaks on how the government can sustain the N35,000 wage award to federal workers to cushion the challenges of subsidy removal.
What is your response to the suspension of the planned strike by labour?
We commend the suspension of the strike because we have consistently advocated that the strike will not serve any significant purpose from the perspective of the private sector, rather it will dig us deeper into the hole, considering the state of the economy and the state of the organised private sector (OPS). We hope that all the parties will live up to their obligations and commitments in the memorandum of understanding (MoU) that was signed.
This is a first step in resolving all the issues that underline the nation’s industrial relations system. Three measures are required to make Nigeria’s industrial space more harmonious. First, we need an industrial relations policy. It is already on the ground in the Ministry of Labour. We got to the stage of validation last year, so we need to do a revalidation, where all social partners will sign onto it. Part of the component of that system will be the respect for labour administration institutions. We have the Industrial Arbitration Panel (IAP) and the National Industrial Court (NIC).
If we are not satisfied, whatever grievance we have, those courts are specialised courts that are created for us. An average disgruntled individual in society cannot go to the IAP or the NIC because it is not for them. So, the IAP and NIC are courts for us to facilitate a peaceful industrial relations system. The first thing is for us to emphasise respect for those institutions. Every institution has been created to guide, adjudicate, or arbitrate on issues in that space and everybody must respect them. Also, is capacity building. There is a paucity of knowledge, even among social partners of our roles and our responsibilities and we must be deliberate at all levels.
You said the government sidelined the private sector in the design of palliative measures. What about the N75 billion intervention fund to support small businesses and the temporary suspension of 7.5 per cent VAT on diesel? Are these not supposed to support organised businesses?
This is quite interesting and we must get the context very well. There is what we call bipartism and tripartism in the context of negotiation and engagement and both are legal and valid in the context of that engagement. Bipartism can be between government and organised labour and it is expected that the conversation in that bipartite meeting is about issues that concern you and me. When it comes to tripartism, the issues are expanded to include issues that concern each of us.
If I am not there, you cannot decide on my behalf. You cannot understand my priorities more than myself. Within the context of bipartism, during COVID-19, for instance, employers entered into an MoU with organised labour, where they agreed that during the period, employers would not downsize. We did not call the government to it because it was a conversation between the OPS and organised labour. The moment we drag in the federal or state workers, then you will be compelled to bring in government into the conversation and that becomes tripartism. We also supported the government and organised labour conversation that led to the issue that happened last Saturday within the context of bipartism. When the MoU came out, we saw recommendations that concerned the private sector. That is a concern.
It was not the content, it was the process added to it and I believe it is very important we start getting processes right. You cannot build a very beautiful house on a very faulty foundation, it won’t work. If it is going to be a conversation that would involve employers’ interest, then employers should be called into the conversation. Organised labour is not the mouthpiece or an affiliate of the employers, they cannot speak expressly for organised businesses and vice versa. On our priorities, there are things we want the government to address. While the temporary removal of 7.5 per cent VAT on diesel is appreciated, the desirable might not be on our top priority list on what we want the government to address. Whatever the wage award may be, if you do not deal with the enterprise side, the escalating cost of goods and services will neutralise every award that you are giving the employees. That is the reality. The temporary removal of VAT is one of the steps to support the OPS. It is a welcome development but whatever palliative you give, if you do not address enterprise sustainability, it would be neutralised by the high cost of doing business and the high cost of goods and services. That is why we are saying that government must address the two issues concurrently. As you are addressing the income side, you are also addressing the production side so that they do not neutralise each other. The government has not factored both sides.
What are the priorities of the OPS?
Our priorities would be definitive timelines of when the funds would be released. A top priority for us is how the government addresses the issues surrounding forex. Currently, forex is becoming a big challenge in buying input and is progressively making a mess of projections. You can’t fly when the issue of forex continues to escalate. We will situate the removal of 7.5 per cent within the context of what the government should do as a way of ameliorating the challenges faced by Nigerians. If you remove 7.5 per cent, it reduces the cost of diesel, makes transportation easier for all Nigerians and running diesel for employers is easy.
So it is not an employer-focused intervention. It is an intervention for Nigerians which we think the government has done to address the issues that concern workers and employers and address the issue as it affects Nigerians. As it is, all organised labour both in the public and private sector, they are less than five per cent of the whole population. So, the intervention should focus on everybody within the context of what they can get immediately, and that is how we think diesel removal is a palliative for all of us as Nigerians. Regarding the N75 billion issue that was brought up as an MoU for small businesses, we believe strongly that the President has made a pronouncement in August, and we strongly believe that it will be implemented. But, we want definitive timelines.
Do you think six-month is enough for the economy to be back on track after which Nigerians will no longer need palliatives to survive?
The expectation is that we are not privy to the conversation between labour and government, which led to six months as contained in the agreement. The thing is after six months, we are all going to bear the consequences, including employers. After six months, what happens? When are employers going to discontinue the interventions for their employees, employers did not put a caveat to say whether it is for three months or six months. But now, we have been dragged into the fray of a six-month intervention. Then what happens after six months? Are we anticipating that rightly or wrongly the petroleum refinery in Port Harcourt will start working in December? Are we also presupposing that Dangote Refinery would have started working by December, and then what is the effect that it will have, knowing that Dangote Refinery is in a free trade zone, which is subject to sell at probably the international price?
So, what is the conversation that we are having with Dangote? To be sure that our refinery will be working by December, the Port Harcourt Refinery will not also be in direct competition or create problems for the investment of another Nigerian that we have created. So, those conversations are what we need to have. This is our concern and it predates this government. You don’t fix one item. In making one policy recommendation or decision, it will be helpful to take a look at what can affect. If not, you’ll have increased wages and then the cost of doing business will continue to increase. As wages increase, the cost of business continuing to upscale will lead to two things; an increase in cost of production and will also lead to likely increase in stock. If the cost of goods increases and the salary increase cannot meet the increasing cost of production, then the business will have increased stock.
Currently, the manufacturing sector has over N200 billion in unsold stocks. Now, those unsold stocks run the risk of expiry dates catching up with them. If I’m a business person and I’ve collected loans from the bank or a creditor, I have unsold stock, my interest doesn’t go on holiday, and I still have to pay interest to the bank. So what will happen in the long run? I will look at what are my options for sustainability and one of the options would be downsizing. Now you have increased salaries but along that pipeline, we are facing a major challenge of unemployment. But you say yes that salaries have increased and that you have met the expectations of a segment of our ecosystem. But we are creating more problems for ourselves on the downline. So the issue for us is we need to look at all those issues and those issues will only be brought on board when everybody is at that table when that conversation is going on.
With the N35,000 wage increase for federal workers, what wage award should the private sector be looking at?
Currently, we have a definitive financial award going on across the board in the private sector. We support in cash and kind through allowances and have adjusted salaries even from the unusual sectors. The other non-financial part of it is that we have come up with measures such as working from home to reduce the pressure on transportation costs among others. We started this in June and the president alluded to it in his August broadcast, where he appreciated the private sector for taking the lead. So we are taking the lead in the promotion of employees’ welfare. On the issue of the national minimum wage, we are also far ahead of this conversation, and it is so unfortunate that even the organised labour did not factor in or appreciate the effort of the organised private sector in all these conversations.
On minimum wage, we negotiate every three years through a collective bargaining agreement. Check most private organisations, their minimum wage is far above N30,000. The minimum wage of each sector has a minimum wage that is negotiated at the sectoral level that is far above the national minimum wage. So the national minimum wage is a guide and because of our commitment to those out of that network, we all agree that there must be a national minimum wage as it is done globally. But the private sector is in a precarious situation currently. Notwithstanding the multidimensional and existential challenge that the organised private sector faces in this environment, we are still doing far more than any other person in this environment.
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