Reality check on minimum wage chaos
THE minimum wage negotiations have descended into chaos. Without declaring a trade dispute, the Nigeria Labour Congress and the Trade Union Congress embarked on a strike during negotiations, accusing the government of facetiousness in meeting their demands.
At that point, there was a wide disparity between the offer of N60,000 by the Federal Government and the N494,000 demanded by labour. This triggered a two-day strike before it was suspended for five days. Positions have since narrowed with the Federal Government offering a marginal increase of N62,000 monthly. Labour has reportedly shifted to N250,000, down from N615,000 initially as of Friday. The organised private sector settled for N60,000 and state governments N57,000 monthly.
From the outset, it was obvious that the latest minimum wage negotiations, mandated by the Minimum Wage Act of 2019, would be difficult. Runaway inflation and sky-high cost of living that have defined the past year have prompted labour to make seemingly outrageous demands. Yet, the challenge is determining what is realistic and sustainable.
Citing a lack of resources, governors argue that many states would have to spend all allocations from the Federal Accounts Allocations Committee on wages. Some will have to borrow. Labour has punctured that argument pointing out that FAAC allocations have risen from N700 billion to N1.2 trillion monthly since the removal of the petrol subsidy.
The labour unions’ refusal to accept what has been offered is understandable. This government has given the impression that it is drenched in cash. Poor judgement has been demonstrated in lavishing billions on frivolities while asking workers to live in hope.
Over 140 million Nigerians have sunk into multidimensional poverty due to a steep rise in food, transport, electricity, healthcare, and other basic costs – a direct result of petrol subsidy removal and naira devaluation by the administration.
Examples of insensitivity to the cost-of-living crisis include the N57 billion allocated to purchase SUVs for legislators and the N90 billion subsidy for Hajj pilgrims. Thirty governors spent over N50 billion reportedly on refreshments, travel, and sitting allowances in the first quarter of 2024 alone. The Vice-President’s residence has just been renovated at N21 billion. Each ranking senator got N500 million for constituency projects.
Resorting to strike to force the government to concede to what it cannot realistically afford is counterproductive and hurts those whose interest labour seeks to advance. Paralysing seaports, airports, schools, banks, and hospitals makes no sense. The shutdown of the national grid was highly irresponsible. The oil sector alone reportedly lost N149 billion in one day.
Insisting on a higher-than-affordable wage will force employers in the public and private sectors to make necessary adjustments. High wages will result in staff rationalisation and new openings taken off the market. Many lowly-paid workers will prefer low wages to no job at all.
Public sector workers will be forced to go as the government at all levels trim the wage bill. Many states will default as they have done in the past and get away with it. Some are not even paying the current N30,000.
The NLC and its affiliates should know that raising wages does not necessarily translate into real benefits in the long run if inflation is not brought under control.
To reach a consensus, labour and other parties should consider a minimum wage template relative to the cost-of-living variables in different states or regions.
The labour unions should focus on pressuring the government to deliver security and social services and stabilising prices. These have longer-term benefits than the occasional pay rise. The government should stop the culture of waste and ostentatiousness, which generates anger on the streets.
