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Minimum wage: States have no choice

By Luke Onyekakeyah
17 December 2019   |   2:59 am
The national minimum wage of N30, 000, which President Muhammadu Buhari signed into law on April 18, 2019, for the suffering and hard-pressed Nigerian workers

The national minimum wage of N30, 000, which President Muhammadu Buhari signed into law on April 18, 2019, for the suffering and hard-pressed Nigerian workers, is a shackle on the neck of state governments that cannot be ignored. The dilly-dallying on whether to pay or not is inconsequential. The earlier state governments embraced the reality of the minimum wage and accommodate it in their budgets, the better for them and industrial peace in the country.

Interestingly, the threat by the Nigeria Labour Congress that it may not be able to guarantee industrial peace and harmony if governors refuse to conclude negotiations and payment of the national minimum wage by December 31, is yielding fruits, as state that hitherto seemed to ignore the new wage have begun to negotiate with their labour leaders to fine-tune the modalities for the payment.

It is a shame that Nigeria, with all its huge oil wealth, counts among countries that pay the lowest wage in the world. While the masses work to keep the country together and running, the ruling class appropriate billions to themselves by hook or crook for doing nothing.

Imagine, for instance, ex-Zamfara State Governor, Yari Abdulaziz, reportedly appropriated N10 million monthly pension payments to himself, which the state lawmakers have nullified. Many other former state governors are still holding on to this rip-off.

The new minimum wage would give some relief to the workers. It shows the Federal Government is sensitive to the plight of workers and this is commendable. The federal government should ensure that all stakeholders implement the wage in light of the worsening economic situation in the country. There should be no room for any state to re-negotiate or reduce the wage.

The approval is the climax of a protracted discussion between the Nigerian Labor Congress (NLC) and the federal government. There is no doubt that the process leading to the approval of the wage has been rigorous. Labor had proposed a living minimum wage of N52, 000, as against the present N18, 000 workers are paid. But after rigorous deliberations, horse-trading, including threats of industrial action by Labor, the amount was slashed down to N30, 000. Workers appear to be happy with the development and are expecting full implementation without further delay.

It is however disheartening that some state governments are not happy with the new minimum wage and would prefer the peanut or slave wage they pay their workers. They’re claiming inability to pay on account of “limited resources” available to the states. The states are asking the president to “take cognizance of the federal structure of the country for a clause to be inserted into the Minimum Wage Act that will give room for states to negotiate how much they can afford to pay”. They are not tired of the series of debilitating strikes in the states rocking the country’s economy. They want to court more industrial actions by refusing to pay.

I would like to state that there is no time the resources of the states would be unlimited. When the country is in an oil boom, the resources were still limited. To say that the states have limited resources doesn’t impress anybody. Second, it is needless inserting a clause that would give the states the power to re-negotiate the wage. The states are not the only stakeholders in the Minimum Wage Act. The local governments, corporate bodies, and organized private sector are also stakeholders. Will these also be free to negotiate with their employees? Any room created in the Act will impute bad blood and the result would be industrial action.

In the United States, there is the federal minimum wage, which is mandatory for every state to pay. However, states may raise their pay above the minimum based on their economic circumstances. The federal minimum wage in the US is $7.25 per hour. That is the benchmark. States could fix their own pay but not below the federally approved minimum wage. For instance, a state like California pays $8. Connecticut and Illinois pay $8.25; Oregon pays $8.40, etc. The city of San Francisco (a local council in our parlance) pays $9.79.

It is obvious that the aim of the states is to reduce the minimum wage to the detriment of workers. Since we’re copying the United States, we should do things right the way they do. If the federal government has approved a minimum wage of N30, 000, no state has the right to pay less. States can only raise the amount but never to reduce it. That is why it is called the minimum wage.

The N30, 000 (about $86) per month approved is not the best that can sustain a worker and his family. It is very low, having been slashed from the N52, 000 ($149) proposed by the NLC. An ideal minimum wage should be able to cater for a worker’s basic needs in a month, including payment of bills. The N30, 000 is grossly inadequate considering the high rate of inflation in the country. It can only serve as a starting point for an upward review in the future.

The state governments have no choice but to pay the wage as approved. The state governments have the penchant of standing against the payment of any nationally approved living wage for workers. The attitude is the same whether it is wage for university workers, doctors, nurses, civil servants, teachers, etc. They often give reasons for limited resources.

Inability to pay is ridiculous if the available resources are used judiciously. You then ask how many workers we are talking about. There is mass unemployment in the country? Many people are jobless. What percentage of the population are civil servants in the states that need to be paid minimum wage? The states are not being honest. Many are also lazy depending only on monthly federal allocation without doing anything.

The uncooperative stance of the states in paying workers is a recurring decimal. It is the main cause of industrial disharmony. Every now and then, a section of the work force would embark on strike to press for the payment of approved wages. The incessant strikes are ruining the already battered economy.

The approved wage could hardly pay the transport fare of a typical commuter not to talk of meeting the basic needs of his family and yet some state governors are reluctant to pay. They want to pay peanut and irregularly too. This amounts to insensitivity on the part of the governors. Before the current N18, 000 per month was approved, there was “war” before the states agreed to pay. It is slavery. The workers are suffering.

Any state that feels that it has no money to pay should declare bankruptcy and seek a bailout from the federal government. It is only then that it would be taken seriously. It is only then also that the workers will be ready to endure the delayed payment. That does not mean that the state will not pay the minimum wage. It will still pay.

Outside a declaration of bankruptcy, nobody should listen to any state government. They have to pay the approved wage to motivate workers for higher productivity. The truth is that no amount approved by the federal government would be acceptable to the states! Some states will still pretend not to have the resources to pay and would ask for a lower wage.

When the previous minimum wage of N7, 500 was approved in 2000, almost all the state governments vehemently refused to pay. Some opted to pay N5, 000, while others sought to re-negotiate the entire payment. The same argument of scarce resources being put now was put forward in 2000. Over the period, we have witnessed oil windfall. States have shared funds from the excess crude account. The dwindling revenue from the federation account being advanced now as reason did not exist when the same sates refused to pay the 27.5 per cent Teachers Salary Structure (TSS) that forced teachers in many states to down tools. In the Southeast and Southwest, doctors and medical workers are on strikes every time over payment of entitlements.

States receive their monthly allocation regularly but don’t want to pay a living wage. What some governors regard as dwindling revenue may in actual fact be the normal revenue accruable to them outside the excess received during the windfall. There is also the internally generated revenue, which the states also rake in.

So long as no state has been declared insolvent, there is no basis to believe the pretentious claims of the governors. Some want to hide under the cover of federalism to deny the poor workers their minimum wage. Federalism does not mean that workers should be enslaved.