By OBINNA EZUGWU
When in April 2019, Nigeria’s president, Muhammadu Buhari finally signed National Minimum Wage Bill into law, jacking up the country’s minimum wage from N18,000 to N30,000 and supposedly bringing an end to what had been months and years of agitations by the Nigerian Labour Congress (NLC) for improved wages, it triggered jubilation in many states secretariats, as workers celebrated what was to be a great new beginning.
But it was obvious that the signing of the bill by the president could not resolve the protestations of several state governments, which had insisted that states should be allowed to determine their own wages according to their individual financial capabilities, even as the modalities for implementation soon became subject of intense disagreement between labour and the federal government.
While labour insisted on a 29 percent salary increase for officers on salary level 07 to 14, and 24 percent adjustment for officers on salary grade level 15 to 17, the federal government offered 11 percent increase for officers on grade level 07 to14, and 6.5 per cent adjustment for workers on grade level 15 to 17, arguing that labour’s demand would push it’s wage bill too high, such that it would not be able to cope.
Both parties would, after months of negotiations, eventually agreed on 23 percent increase for workers on grade level 7; 20 per cent for grade level 8; 19 per cent for grade level 9; 16 percent for grade level 10 to 14, and 14 percent for grade level 15 to 17.
Soon, however, the fight shifted to state governments, as many governors held back on implementation of the new law. And two years down the road, the issues continue to linger and the celebration of workers in many states capitals have proved to be premature. As at the last count, 18 states are yet to implement fully the new minimum wage, and for some of those who have, it’s a delicate balance. In January, Kano State Government said it was stopping the new minimum wage had decided to pay its workers with the N18,000 old wage due to the recession occassioned by the COVID-19 pandemic.
Irked by the foot dragging by the governors, labour last month, directed workers in all the states where the minimum wage of N30, 000 was yet to be implemented to immediately proceed on strike.
But the governors appear to have staged a fight back of their own. There is now a bill currently before the federal house representatives seeking to render the national minimum wage law basically irrelevant; what many see as the hand of Esau but the voice of Jacob.
The new bill, which was sponsored by Garba Datti, a Kaduna lawmaker, has passed first and second reading in the house of reps, and seeks to decentralise the payment of minimum wage to workers in the country by moving the national minimum wage from the exclusive legislative list to the concurrent list, and thus allowing states to pay according to their financial capabilities. It has naturally caused consternation in the NLC, with the unions embarking on a nationwide protest, and opened up a new round of arguments between state chief executives and the labour unions.
Speaking when he hosted pro-chancellors of state-owned universities on Thursday last week in Abuja, Ekiti State governor, Kayode Fayemi, who doubles as chairman of the Nigerian Governors’ Forum (NGF), argued that the same salary structure should not be imposed on states, because the federal and state governments do not have similar economic situations.
According to governor, “You can’t impose a federal salary structure on states, because we do not all have the same economic or financial situations.
“I, for example, do not have the resources of Lagos state, so you won’t expect me to earn the same salary as the governor of Lagos.
“The people you appoint as vice-chancellors need to speak truth to power. They need to be able to bite the bullet, and not just be a ‘yes’ person.
“We need to work together to confront these issues. We are running glorified secondary schools as universities by this system, and you have to help us in insisting that the institutions, too, do the right thing.”
But in a counter argument, NLC president, Comrade Ayuba Wabba insisted in an interview with PUNCH, that the issue of national minimum wage is a globally accepted standard, backed by international laws and convention to which Nigeria is signatory, and could not therefore be determined by individual states.
“The national minimum wage is a global standard set by the International Labour Organisation to protect workers from exploitation and it is defined as the minimum which workers can be paid hourly, weekly or monthly,” Wabba said.
“For the avoidance of doubt, the International Labour Organisation which is the first agency of the United Nations, said this in its Philadelphia Declaration. This is the foundation of having a minimum wage in laws of countries but importantly, we have also two important conventions of the ILO which regulate the minimum wage.
“First is Convention 26 of 30th of May, 1928 which is further reinforced by Convention 931 of 1970. Nigeria as a member nation of the ILO has ratified Convention 26. The issue of minimum wage is also to enforce true federalism; there is nothing like true federalism, we only have federalism and the cradle of federalism is the United State of America where the minimum wage is $7.25 hourly fixed by a federal law.
“It is the lowest which can be paid to a worker as mandated by a federal law; states can pay higher in America because some are paying $10, $12 but no state can pay lower because it is contained in a federal law. What we are saying in the case of Nigeria is that the minimum wage law is insulated and when you say federal law, it means states can pay higher but not lower. That is the principle that has been set by the ILO but what our governors want is to remove it from the exclusive list and go and fix what they want.”
Wabba emphasised that governors could not pay below the minimum wage when they signed the agreement that resulted in the 2019 minimum wage law.
“We negotiated that the minimum wage for more than six months and six governors were in attendance representing the state governments. We had the governors of Imo, Kebbi, Rivers, Plateau, Osun and Gombe states all participating in the process of arriving at a national minimum wage,” he said.
“We also had the organised private sector and others and the issue of ability to pay were discussed. In any case, setting the barest minimum doesn’t mean states can’t pay higher. As of today, some states are paying higher than the N30,000. That is the principle and that is why we don’t want that law which is a global standard abused. We don’t want it removed from the exclusive list because once you remove it, it means we don’t have a national minimum wage.”
It’s between the rock and a hard place. The economic realities of the country considered, the original N18,000 a month minimum wage, which amounts to about $38 at the prevailing market exchange rate, is a non starter in a country where a bag of rice, the popular staple food costs nearly N30,000 – sometimes even more – and indeed the N30,000 minimum wage, which is the issue at stake, amounting to just about $63 a month, many say, is also grossly inadequate.
“My take is that the minimum wage is too low and income disparity is one of the problems of this country today,” said Emma Nwosu, former Managing Director, ACB International.
However, the obvious reality is that the finances of most states and indeed the the debt hobbled federal government, are in the red. Many states were owing months of salary areas even before the new minimum wage became law, and the financial implication may have informed their decision to not implement fully the new law.
Indeed, the new minimum wage, when it was signed into law in 2019, immediately jacked the federal government’s wage bill up by over 67 percent, amounting to about N6 trillion, more than a third of the year’s annual budget of N8.9 trillion. A year later, in 2020, Minister of Finance, Zainab Ahmed disclosed that federal government’s wage bill had risen by 150 percent in five years.
“You can see from the presentation that I made, in 2015 the wage bill of the government, the salaries of government officials stood at N1.5 trillion. That has gone up by 150 per cent in what we have in 2020,” Ahmed had said in October.
“And the wage bill keeps growing on a daily basis. That is the biggest expenditure in our budget and we must pay special attention to it to be able to make sure that at least what we are paying is reasonable, true and fair.”
In some poorer states, implementation could have greater impact. In 2018 for instance, the 36 states of the federation had a total budget of about N9.5 trillion, averaging N256.92 billion per state. Out of this sum, personnel cost accounted for more than 58% of the entire budget size. The states are however, unequally yoked, meaning that while some can afford to pay more than N30,000, others would have a hard time paying more than N18,000.
In 2021 for instance, while Lagos, the country’s commercial centre has N1.163 trillion budget, Ekiti has a budget of 109.6 billion. Again, in the first half of 2020, Lagos generated N204 billion as internal revenue, higher than that of at least 29 states put together. The same period, Ekiti generated N3.2 billion and Jigawa generated N3 billion to take first from the rear. In 2020, Lagos got 115.93 billion as FAAC allocation, to come fifth after Akwa Ibom, Delta, Rivers and Bayelsa states which are oil producing states, while Ekiti got N39 billion to top the list of five least receiving states. Others are Osun, N30 billion; Cross River, N32 billion; Plateau, N35 billion and Ogun N37 billion. To put in better perspective, Ekiti wage bill as at 2018 stood at N2.6 billion.
The argument by the less economically endowed states therefore, is that they could not be compelled to pay as much as richer states. Analysts agree that there is a point in the argument, but like labour, insist that no state should pay below the N30,000 minimum wage.
“We have been talking about restructuring so I cannot be advocating for uniform wages throughout the country. People should pay as they can afford to pay. So it should not be uniform, but I support labour on the fact that the minimum wage is too low,” Nwosu said.
“Ideally, minimum wage in Nigeria should not be lower than N50,000 per month. And we can achieve this by slightly moderating what political office holders collect, minimising wasteful expenditure and adjusting some other things.
“So it is possible for the federal government, Lagos, Rivers, Delta, Anambra and a few other states to pay N50,000 or more as minimum wage. Yes, I agree with labour that the minimum wage is too low, but I do not agree that the wages should be uniform across the States.
“I also support the idea that there should be a floor. If N30,000 can be the floor, of which no state is allowed to go below, that’s fine. But states can pay more. It cannot be uniform across the states because the states are not equal in revenue generation.
“Yes, all the states can pay the N30,000 but the point is that they are wasting money. Security vote for example, is a meaningless waste. I tell you, many of them collect up to N1billion in a quarter as security vote which can pay the salaries of all civil servants for several months. So, it is not true that they cannot pay, they can pay. They should reduce the cost of governance.
“Some have up to 200 special assistants doing what? Those boys that help them rig elections, they make them special assistants. Some of them have no work to do there, but they’re collecting monthly pay and buying cars. So political office holders from the legislatures to commissioners, special assistants and so on, are overpaid. Some of them cannot make a correct sentence, but they are paid more than distinguished professors and lawyers and engineers who are in the national assembly of the United States or a typical country in Europe.”
Making similar argument, Dr. Bongo Adi, senior Economics lecturer with Lagos Business School, though supported the idea of centralised minimum wage, said states can only be allowed to pay higher than N30,000.
“Since you run a centralised system, there is no basis for states to determine their own minimum wages. It has to be a uniform, but if it is not uniform then it means should now begin to look at fiscal restructuring,” he said.
“The minimum wage definitely should be implemented across all the states and nobody should tell me that any state cannot afford to pay. If you look at what all the states of the federation take as monthly allocation and their generated revenue, it is enough to pay the minimum wage. But states like Lagos and Rivers should actually be paying more than the federal government.
“The problem of the States is not minimum that they are paying minimum wage; that is not why they are books are in the red. The fact is that the states are the worst managed entities in the Nigerian federation. They are basically allowed to get away with murder.