Fears of enforcing decentralised minimum wage negotiation system

The recent call by some governors that states should be allowed to determine their minimum wage based on their financial capacity, means amending the Constitution by moving item 34 of the Exclusive Legislative List to the Concurrent Legislative List. This move, labour said will be a declaration of war on Nigerian workers, writes GLORIA NWAFOR.

At the recent nationwide public hearing on the new national minimum wage held across the six geo-political zones, governors demanded a review of the revenue allocation formula to enable them to implement the proposed national minimum wage.

They insisted that the current revenue allocation must be reviewed in favour of states to empower them to meet workers’ expectations.

Currently, the Federal Government gets 52.68 per cent; states 26.72 per cent and local governments 20.60 per cent allocation from the federation account.

Speaking during the meeting at the southwest zone, Osun State Governor, Ademola Adeleke, among others, called for an urgent review of the revenue-sharing formula to favour the state and local governments.

Adeleke based his submission on the fact that the majority of the Nigerian people live in the states, so the revenue-sharing formula should be reviewed in tandem with the public outcry for the allocation of more resources to states. He had insisted that the states should be allowed to negotiate with their workers’ pay.

“It has to be reiterated that the majority of the government at the sub-national can’t sustain and improve wages and salaries for their workers without a significant adjustment in some of the narratives in the national economy,” he stressed.

While the states called for a higher revenue formula, they also urged that they should be allowed to determine their minimum wage based on their financial capacity,

Allowing this means amending the 1999 Constitution by moving item 34 of the Exclusive Legislative List to the Concurrent Legislative List.

For emphasis, Nigeria is duty-bound as a signatory to ILO Convention 131 to implement a minimum wage regime in line with global standards.

Recall that when the N30,000 minimum wage was passed in 2019, it was a tug of war between organised labour and states on implementing the new wage then. The organised labour had to shut down many states over poor implementation of the minimum wage.

To date, statistics released by BudgIT showed that 15 states are yet to implement the full N30,000 minimum wage. While some states still defaulted in paying the N30,000, The Guardian gathered that in Borno State, some teachers earn a paltry N13,500 as salary.

Former President of the Trade Union Congress of Nigeria (TUC), Peter Esele, who recalled when he was part of the national minimum wage negotiation process, said: “How do you expect the productivity of such workers to grow and how do you expect the person to survive in that mental frame of mind and pass knowledge? I hope that governors stand and treat workers right because when you do so, you stimulate the economy. The super-rich don’t stimulate the economy, it is the middle and those struggling because they must spend money.”

In 2021, a bill, which sought to decentralise the negotiation on the minimum wage in the country, by removing the negotiation on minimum wage from the exclusive legislative list to the concurrent list passed second reading at the House of Representatives. The bill, Differential Wage Bill, had the support of state governors, stating that it negated the principle of true federalism.

According to the sponsor, Garba Datti Mohammed (APC Kano), the bill is to allow both the federal and state governments to freely negotiate minimum wage “with their workers in line with our federalism.”

The bill seeking to remove the negotiation on minimum wage from the exclusive list to the concurrent list passed the second reading in the House of Representatives.

During the debate at the plenary, Mohammed said, “Many states have not been able to implement the national minimum wage because it was imposed on them from Abuja.”

However, workers opposed the bill, where they said that the bill was dead on arrival.

The past president of the Nigeria Labour Congress (NLC), Ayuba Wabba, during whose tenure the matter was brought up, had said that any attempt to remove the national minimum wage from the Exclusive Legislative List to the Concurrent List was a mischievous effort to foster crisis, chaos and anarchy in the country.

Wabba said the national minimum wage served as social protection by providing minimum income floors to safeguard low earners.

He said labour’s argument for the retention of the national minimum wage on the exclusive legislative list was to also propel the fact that the minimum wage was a tool for social inclusion and poverty reduction.

“For Nigerian workers, it has been a catalog of workplace and trade union rights violations. First, is the criminal refusal by some state governors to pay the new national minimum wage and consequential increase in salaries, thus violating workers’ rights,” he said.

The Federal Government through the former Minister of Labour and Employment, Chris Ngige, told workers then that the transfer of the national minimum wage from the Exclusive to the Concurrent list would not work.

Ngige said that the new minimum wage was a national law, which would not be manipulated by anyone.

However, as the country’s negotiation for another new minimum is ongoing, the governors are again bringing it to the fore, insisting that the states should be allowed to negotiate with their workers’ pay.

This means transferring the minimum wage from the Exclusive Legislative List to the Concurrent Legislative List.

However, organised labour has said the move, if granted would be a declaration of war on Nigerian workers.

President of the TUC, Festus Osifo, in an interview with The Guardian, insisted that the minimum wage must remain on the exclusive legislative list.

According to him, states received more than 200 per cent of what they used to receive from FAAC allocation in April last year. He maintained that there is no excuse for states not to meet the payment of the new minimum wage.

Since the withdrawal of fuel subsidy that has increased FAAC allocation to states, Osifo said states should have no reasons to complain of low revenue.

The TUC chief said labour is advocating that the Federal Government should pay workers directly from state FAAC allocation whenever they default.

A labour expert and lawyer, Paul Omoijiade, who kicked against the move, said it would lead to anarchy.

Noting that states have not been compliant with all employment laws, especially on minimum wage, Omoijiade said Nigeria would only want true federalism when it is in their favour.

“They want it so that they would be able to pay the workers peanuts. That is a lazy approach to the entire process by the state governments. Labour creates wealth and workers should be paid their wages,” he said.

Secretary, TUC Lagos State Council, Abiodun Aladetan, said it was sad that the conversation would always occur whenever Nigeria wanted to negotiate a new minimum wage for workers.

He said this was sad because when the subsidy was removed, a flat rate of N5 billion was given to all states of the federation to cushion the impact. He said governors did not argue that such money should be distributed according to the population of their various states.

According to him, when salaries of governors are paid, they earn equal amounts and no governor is bold enough to challenge the status quo because their capacities are not the same,

“But when it comes to the only thing that will benefit workers, they will start this unfortunate conversation that states should be allowed to pay whatever they can based on their capacities.”

He stressed that minimum wage globally was a subject of interest to many stakeholders, including the haves and the haves not, the bourgeoisie and the proletariat, the Lords and serfs, capitalists and labourers, academics, investors, wholesalers, retailers, farmers, landlords, students and dependents, among others.

The reason for the global interest, Aladetan said, was that it is the currency or the denominator with which economic activities are calibrated.

He said organised labour in Nigeria was specifically interested in the country’s minimum wage, due to the absence of social safety nets by the government at all levels.

According to him, it is only on the minimum wage as their only source of income that they rely solely on to meet their deep-seated needs.

On why the minimum wage must remain in the Exclusive Legislative List, Aladetan said the most vulnerable and those at the bottom of the economic ladder would be further protected, noting that the nation’s minimum wage is currently one of the worst globally.

“It must be noted that Nigeria is duty-bound as a signatory to ILO Convention 131 to implement a minimum wage regime in line with global standards.

“Also, the private sector should not be excluded through the decentralization of minimum wage. If this is allowed to stand, it will lead to the segmentation of the Nigerian labour market and the attendant crises, “he said.

In his opinion, a public affairs analyst, Jide Ojo, said while labour would want a collective bargaining agreement, argued that it was a hoax because many private entrepreneurs pay less than the minimum wage and the labour unions turn a blind eye.

Querying if the argument could be faulted, he advocated that states should be able to negotiate the minimum they can carry, noting that the federal and states are not equally endowed in terms of revenue allocation.

According to him, the federal can borrow limitlessly, it controls 48 per cent of the revenue collects VAT on behalf of states and gives them what they deem fit.

He said states should be allowed to go into negotiation about the reality of their minimum wage.

“Since they don’t have the same amount from the federation account, you can’t bind them with minimum wage. What Lagos gets as revenue share is different from what Zamfara or Ekiti gets, almost triple. If you just press the states too hard, they will agree to the minimum wage but will give their workers the option of retrenchment or half salary.

“Recall former Governor Rauf Aregbesola in Osun State, paid salaries in percentages of 50 and 70 to a certain category of workers, throughout his two terms,” he said.

He stressed that Nigerians were just playing the ostrich when they insisted there must be minimum wage, “when we know that states are not equally endowed in terms of monthly allocation from the federal government or their Internally Generated Revenue (IGR).

“In states, their population, workforce and resources are not the same. This is a federation; you must make allowance for every state to negotiate their realities and for their workers to accept or not accept what their governors will pay them. But to say they are duty-bound by the national minimum wage is to grandstand the reality on the ground. The reality is that each state should be allowed to negotiate their wages,” he said.