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Governors’ advice on leaner public service rattles labour, experts

By Geoff Iyatse, Gloria Nwafor (Lagos) and Collins Olayinka (Abuja) 
08 August 2022   |   4:00 am
There are worries that the living conditions of Nigeria’s civil servants will further degenerate if the Federal Government accepts the governors’ proposal calling for the premature retirement of civil servants...

Buhari. Photo/Facebook/Asorock

• ‘Cash-starved governors seeking premature retirement for selfish reasons’
• Move will demoralise workers, affect productivity
• FG cannot be trusted with the payment of severance benefits 
• Incentivise OPS to revitalise the economy, govt urged
• Workers to demand an inflation-adjusted pay rise
• Revive manufacturing sector to boost the local economy, experts tell FG

There are worries that the living conditions of Nigeria’s civil servants will further degenerate if the Federal Government accepts the governors’ proposal calling for the premature retirement of civil servants, who are above 50 years.

  
This comes as the labour unions and members of Organised Private Sector of Nigeria (OPSN) kicked against the proposal, saying the Federal Government cannot be trusted with the payment of severance benefits to workers whose jobs, the advice would put on the line. 
 
The governors had proposed the measure as part of coordinated efforts to instil fiscal discipline and prevent the country from imminent economic collapse.
   
In the proposal, the governors had reportedly urged President Muhammadu Buhari to begin the implementation of the updated Stephen Oronsaye Report, which recommended the merger and shutdown of agencies and parastatals with duplicated functions as a way to address inefficiency and reduce the cost of governance.

Other urgent steps advanced by the governors to prevent the nation from economic collapse included putting an end to the Central Bank of Nigeria’s financing of the government’s budgetary expenditures and converting its N19 trillion debt into a 100-year bond; eliminating petrol subsidy/under-recovery of N6-7 trillion; eliminate NNPC’s federation-funded projects; cap Social Investment Program (SIP) and National Poverty Reduction with Growth Strategy (NPRGS) budgets to N200 billion from N570 billion; eliminate extra-Constitutional deductions from FAAC; reduce National Assembly constituency projects, among others.

Last week, an analysis of Nigeria’s external reserves revealed that the figures amount to only $15 billion, well below the $36 billion balance on the gross external reserves claimed by the CBN. With the nation spending N5.9 trillion on imports in the first quarter of the year, reserves of $15 billion will barely cover four months of imports.

Also, last week, details emerged that the balance in Nigeria’s Excess Crude Account had depleted significantly from $35.37 million to $376,655, leaving the nation with no buffers to stabilise the economy and its currency.

Yet another indication emerged recently that the nation was broke as debt service surpassed revenue. According to details of the 2022 fiscal performance report for January through April, Nigeria’s total revenue stood at N1.63 trillion while debt servicing stood at N1.94 trillion, showing a variance of over N300 billion.
   
In the first trimester of the year, the Federal Government spent N1.26 trillion on personnel costs, including pensions. The amount was 77 per cent or over three-quarters of the total retained earnings pegged at N1.63 trillion. A whopping N1.94 trillion or 119 per cent of the amount of revenue realised was gulped by debt servicing.
   
While the public revenue declined, disturbingly, in recent years, and the government played the ostrich and snubbed all recommendations (including those made by the committees it set up), public debts grew in leaps to hit N41.6 trillion at the close of the first quarter of the year, raising concern about debt sustainability.

A professor of applied economics, Godwin Owoh, described the growing debt as self-affliction, saying government should not be administered in such a grossly inefficient manner.

  
Findings suggest that many state governments are currently on the verge of distress with an overhang of multiple commercial loans secured for “phony projects.”

A banker disclosed at the weekend that some loan recovery personnel resumed work at government offices as lenders intensified efforts to recover their facilities.
   
The Guardian had earlier reported that state governments were under unusual financial pressure over falling revenue, ballooning debt servicing costs and growing obligations. As at March 31, the 36 states and the Federal Capital Territory (FCT) were indebted to the tune of N4.84 trillion. 
   
While their debts have ballooned, PMS subsidy has shrunk the national cake, reducing their share of the common purse. Some analysts said the recent calls by governors are borne out of desperation for survival and have nothing to do with their concern for efficiency.   

   
The organised labour have queried the feasibility of the novel proposal, wondering how the government intends to raise huge amounts to pay off the employees to be disengaged, majority of who are on directorate cadre and permanent secretary level.
 
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said it would attract a push back from the labour unions, as they will not sit back and allow the kind of proposal to scale through.
 
Noting that it is good to cut the cost of governance, but asking civil servants of that level to leave the service was going to cause a lot of dislocations in the civil service.
 
Rather than asking them to leave, he advised that it would be better to look critically at all the cost variables in the public sector vis-a-vis overhead cost, bloated capital projects, corruption and leakages, as well as and how the nation could fundamentally initiate some reforms.
 

“The civil service is like an engine room for government and I don’t think it’s an advisable thing to do. Look at how much the country pays for subsidies. Perhaps, this may not be the appropriate time for us to remove it if we are committed to appropriate reforms that should have been done long ago. 
 
“If you compare corruption to the savings you will make from these people, I am sure that you will not find a basis for paying them off. Look at how much people have fraudulently amassed, it is amazing. How many top people can legitimately account for the assets they have?
 
“The issues are much broader than just coming with a proposal of paying off of 50 years and above. It is a very simplistic way of dealing with a much deeper problem,” he said. 
 
Yusuf, who is the immediate past Director-General of the Lagos Chamber of Commerce and Industry (LCCI), added: “If we implement the Oronsaye report, wholesale as it is, the kind of shock it will also create in the social environment will be very high because the number of people it will affect will be so much. It is something that we have to do in phases and gradually so that the shock on the system will not be so much. This is because civil servants in their nature cannot easily transition into entrepreneurship, many of them are not cut out for it.”
ALREADY, the National President of the Association of Senior Civil Servants of Nigeria (ASCSN), Dr. Tommy Okon, who described the governors as enemies of the economy, said the association would respond to them appropriately. 
 
Countering the governors’ advice, General Secretary of the Nigeria labour Congress (NLC), Emmanuel Ugboaja, said their advice was a clear display of their lack of understanding of how a nation works.
 
He said the proposal would not fly since work is not done by age, but by skills, routine and process.
 
A public affairs analyst, Jide Ojo, said the FG needed to be mindful of existing civil service rules and law, stating that government should make it optional to avoid conflict of interest and faceoff between the FG, state and labour unions.
 
On productivity, he said it would demoralise other workers if made mandatory. Ojo said with the nation’s unemployment rate at 33.3 per cent and percentage of FG workers that is infinitesimal, if government does not incentivise the informal sector and industrialise Nigeria, “even if you say civil servants should reduce 10 years on their retirement, it will not solve the problem of unemployment.
 

“The bigger challenge is how do you incentivise the informal sector, because that is the engine of growth and development.

They form the larger part of the workforce, government employees are just 10 to 20 per cent. If the governors said they don’t want the economy to collapse, the economy has already collapsed, let’s not deceive ourselves.
 
“If it is made optional, it may work but does the FG have the funds to pay these people, to incentivise them not just on paper, are they ready to fully implement it? We have seen what happened with ASUU, where they went into an agreement to revitalise the sector and FG reneged after signing the agreement. FG cannot be trusted because at the end of the day if these people are lured to resign, for them to get their severance benefits will become counterproductive and may make those who remain in the civil service to be more corrupt than they currently are.”
 
Similarly, the Director-General of the Nigeria Employers’ Consultative Association (NECA), Adewale Oyerinde, asked if government would follow laid down rules as enshrined in labour law peradventure the workers were open to get paid off.

 
“Will their retirement package be paid at the time of early retirement or they will have to leave and join the queue of pensioners, including those seeking gratuity? It won’t be a unilateral decision or retire by fiat. So that conversation is an option,” he said.
   
Also reacting to the proposal of the governors, the pioneer Director-General of the Bureau of Public Service Reform (BPSR), Dr. Goke Adegoroye, flayed the move, saying there is no record where such insipid contemplation had happened before. He urged federal, state and local governments to allow the system to purge itself by default.  
   
He said: “That is unimaginative! Where in the world does that happen: that a government will seek to retire its workforce at the peak of their productive years? How many of these governors are under 50 years? Why don’t they start by getting themselves out of governance? The same governments that succumbed to labour pressure to increase the retirement age of teachers from 60 to 65 and years of service from 35 to 40 years despite being aware that ours is a heavy youth-laden population? We installed the system’s effective policies and processes to reduce waste but they have not been able to sustain it. 
   
“The IPPIS almost became a cesspool of paying fake workers; the tenure system has been left hanging since 2016. Permanent Secretaries and career Chief Executive Officers of agencies that are due for retirement are given an extension of the retirement date. The agencies are loaded with new recruitment that the manpower plan cannot justify, and the system is not courageous enough to deal with officers that have disciplinary cases etc.”
  
To achieve a stable civil service, he urged governments – federal, state, and local governments – to stop the political manipulations of appointments and allow the best within the system to emerge and be appointed into top bureaucratic positions of Secretary to Governments, Heads of the Civil Service and Permanent Secretaries and Director-Generals.
   
Also, the Chief Executive Officer, Dairy Hills Limited, Kelvin Emmanuel, said the proposal to retire all civil servants above 50 across 34 Ministries, Departments and Agencies is a double-edged sword. 
  
Emmanuel, who traced the idea to the Stephen Oronsaye Report of 2009, that was adopted but not ratified by the late Umar Musa Yar’Adua government would have seen the government place an eight-year term limit for all Permanent Secretaries and Directors from Grade level 16. 
   
He added: “Therefore, while on one hand, the proposal by the Nigeria Governors’ Forum achieves the earlier objective that was set up in 2009 by the late head of service (Stephen Oronsaye), it will also task that the Federal Government to not only retire the experience that comes with age but will also have to pay out all the retirement benefits that go with clocking 60 in the civil service.
   
This comes against the backdrop of the possibility of civil servants demanding a pay rise, which they say, is influenced by rising inflation. 
   
Indeed, the Joint National Public Service Negotiation Council has since sent a memo to the Federal Government on the issue. 
   
The National President of the Association of Senior Civil Servants of Nigeria (ASCSN), Dr. Tommy Okon, who disclosed this to The Guardian in Abuja, explained that the rising inflation and the steady devaluation of the Naira make the upward review of the N30,000 minimum wage very urgent.  
   
His words: “With the rate of inflation in the country, it seems to me that Nigerian workers are marked for execution. With the prices of goods and services hitting the rooftops, petrol prices jerked up, school fees rising, house rents on historic height, transport fares out of the reach of the common man and the wages stagnant, tell me what is left for the Nigerian workers. Bread used to be the food of the common man. Today, the price of bread has moved by more than 500 per cent. In all of these, some governors still think that the N30, 000 minimum wage is beyond them to pay.”   

AS the price of crude oil in the international market continues to rise in recent times, Nigeria has not been able to reap appreciable economic benefits. Nigerians continue to grapple with low revenue, depreciating Naira and dependence on debt to finance budget deficits and capital expenditure.

Some analysts, however, suggested that neglect of the industrial and manufacturing sectors of the Nigerian economy is a major bane of its economic growth.

A financial expert, Okechukwu Unegbu, urged FG to take urgent steps to revive the manufacturing sector so as to boost the local economy. Unegbu said the absence of a vibrant industrial and manufacturing sector in the country had exacerbated various economic challenges, like rising inflation and an unstable currency (Naira).

According to him, the priority for government and its relevant agencies is to help the industries to start producing again.

“The Federal Government should address fundamental dislocations in the country, like boosting investment, reducing unemployment rate and cutting down on inflation,’’ he said.