Tuesday, 3 May 2016

New minimum wage: how realistic?

This year’s May Day activities in Nigeria were marked with the Nigerian Labour Congress (NLC) and the Trade Unions Congress (TUC) jointly tabling a demand for the upward review of the national minimum wage from N18,000 to N56,000.

A rival faction of the NLC led by Comrade Joe Ajaero simultaneously demanded N90,000. Labour hinges its demands, despite the parlous state of the economy, on the grounds that a minimum wage review is long overdue.

They grumble over the steep rises in the costs of electricity, petroleum products, food items and the general inflationary trends in the economy in the past one year. These came at a time the 36 governors had just visited President Muhammadu Buhari in Abuja asking for another lifeline, the second within ten months.

It will be recalled that President Buhari yielded to pressure from the governors and approved a N804.7 billion bailout, which was released by the Central Bank of Nigeria (CBN) in September 2015.

But in November 2015, barely two months after the bailout, the governors, through the Chairman of the Nigerian Governors’ Forum, Alhaji  Abdulaziz Yari of Zamfara State, announced that with 24 states unable to pay salaries, they could no longer pay even the N18,000 minimum wage.

The stage is set for a prolonged and protracted Labour dispute, which will surely worsen the state of the economy. Labour groups lament that the Federal Government as well as the state Chief Executives have continued to live large in spite of the economic crunch.

They have continued to maintain large retinues of political appointees, moving around in chartered aircraft and generally refusing to limit public spending. They argue that if the government cuts down on excesses there would be enough to go round.

Though we regret  the refusal of the Presidency, governors and the legislative arms of government to trim down their overheads and lifestyle, we are convinced that this alone will not release enough funds to finance a new minimum wage.

The challenge staring us in the face requires something far more radical and profound. The Federal and State governments are going bankrupt because an over-centralised economy that depends on oil as the major foreign exchange earner has become unsustainable.

Even if oil prices rebound to the historic levels of 2012/2013, the problem will only hide for a while until the prices crash again. It is time to restructure and adopt fiscal federalism. We should transfer the power to manage the economy from the Federal Government to the federating units, which will pay taxes to the Centre.

We should also re-examine the hugely expensive Presidential system of governance. Unless  something dramatic is done about the economy,we might be facing  a system implosion.






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