By Olusegun Adeniyi
The National Minimum Wage Act that came into force on 18 April 2019 prescribed a five-year review cycle. For that reason, the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) had the law on their side for the strike that paralysed the country on Monday. But even if some of us have issues with shutting down the national grid and closing the airspace, workers were not just seeking to fill a requirement of the law. The current socio-economic realities in Nigeria have rendered the N30,000 agreed upon in 2019 almost worthless. If living in extreme poverty, going by World Bank parameters, means living on less than $1.90 (almost N3000) per day, it is indeed very telling that few Nigerians can now afford what amounts to 10% of the current minimum wage. ‘Subsidy is gone’ and merging the exchange rates are at the heart of the inflationary crisis that is depleting incomes and savings, fuelling suffering and despair across the country.
Today, millions of Nigerian families go to bed without any certainty as to where their next meal will come from. To compound their problem, prices of foodstuff are skyrocketing. Using a ‘cost of food basics’ analysis that compares the monthly minimum recommended spend on food per adult and average wage in 107 countries, a United Kingdom-based Institute of Development Studies, last year placed Nigeria as the second poorest country in the world in terms of food affordability. We don’t even have to seek external validation for the current suffering by most Nigerians. A recent and more comprehensive report on poverty by the National Bureau of Statistics (NBS) estimated that 133 million Nigerians were multi-dimensionally poor based on four indicators: food security, healthcare, education, and work.
With no conscious effort to cut down on the money spent on frills by political office holders at all levels, it is difficult to tell Labour that there is no money to pay whatever they demand as the minimum wage for workers. President Bola Tinubu, for instance, has a bloated cabinet of 45 ministers and the two budgets he has put forward in the past one year do not inspire anybody to believe he understands the gravity of the situation in the country. In the absence of concrete measures to tame food inflation, the obsession with all manner of revenue generating gambits that further pauperize the people makes it difficult to sympathise with the government. But there are still pertinent issues on minimum wage that should not be glossed over by critical stakeholders. An historical context may be important here.
In 1981, a minimum wage of N125 was agreed upon. Given the exchange rate at the time ($1.48 to a Naira), that translated to about $185 per month. Ten years later in 1991, the minimum wage was increased to N250. Going by the exchange rate of 8 Naira to a dollar at the time, that amounted to about $30. But that did not tell the whole story. As a National Youth Service Corps (NYSC) member in 1989/90, my monthly ‘allawee’ was N250 per month. Not only was it enough for my upkeep but I still had savings. That speaks to the Cost-of-Living Index (COLI) in the country and the purchasing power of the Naira at the time. In 2000 when the minimum wage was pegged at N5,500, the exchange rate was N84 to a dollar. Eleven years later in 2011, when the minimum wage was jarked up to N18,000, the exchange rate was N155 to a dollar. In 2019 when the new minimum wage became N30,000, the exchange rate was N305 to a dollar, but the COLI had started to go haywire. With the same exchange rate now about N1500 to a dollar, we can do the arithmetic to understand how hard things have become for the average Nigerian worker.
But what most people don’t understand is that the minimum wage is not about just government workers. It is meant for all workers in the formal sector except those on part time employment, or establishments with less than 25 persons. In a survey report titled ‘Labour Force Statistics’, released in February, the National Bureau of Statistics (NBS) revealed that about 92.3 percent of Nigerian workers are in informal employment as at the third quarter of 2023. The implication is that Labour is fighting for a tiny minority with their fixation on federal workers. So, this conversation is narrow and counterproductive.
Last week, the Organised Private Sector of Nigeria (OPSN) defended the initial N60,000 on offer by the federal government. “While it is important to note that socio-economic conditions over the years have rendered the N30,000 minimum wage inadequate, the same conditions have incapacitated many businesses, fatally affecting their sustainability and ability to pay,” according to the Nigeria Employers’ Consultative Association (NECA) and OPSN spokesperson on the minimum wage negotiation, Adewale-Smatt Oyerinde.
The OPSN is made up of the Manufacturers’ Association of Nigeria (MAN), National Association of Chambers of Commerce, Industries, Mines and Agriculture (NACCIMA), National Association of Small Scale Industries (NASME) and National Association of Small Scale Industrialists (NASSI) and NECA. “The offer of N60,000, which is a 100 per cent increase in the current national minimum wage was sacrificial on the part of the organised private sector,” said Oyerinde who harped on the need to protect jobs and ensure sustained growth in the economy. “The demand by organised labour at this period has the potential to cripple small and medium enterprises and push many other businesses into comatose.”
To understand our national dilemma, here are facts that should compel sobriety. As of June 1980 (44 years ago), a barrel of oil was selling for $37.24 and we were pumping 2.2 million barrels into the international market daily. The population of the country at that time was 73.44 million. Today, the price of oil is $85, and we are pumping roughly 1.3 million barrels a day. Several times in recent years we were pumping less than a million barrels per day. The implication is that while our population (currently estimated to be 229,152,217) has more than tripled, our earnings have not changed because we still rely on oil to run our economy. And with a penchant by succeeding administrations to create bubble jobs, we have almost five times the number of workers in the public service today than we had at the time!
Meanwhile, the process by which the Ama Pepple-led national minimum wage tripartite committee arrived at the figure of N30,000 was perhaps the most rigorous of any such undertaking in recent years. When they began work in December 2018, labour was demanding N66,500 per month while the organised private sector proposed N25,000. Incidentally, of the six governors, each representing a geo-political zone, that were in the committee, only Abubakar Bagudu, then governor of Kebbi, who represented the North-west, took the assignment seriously by attending the sessions. Bagudu is now Minister of Budget and National Planning and is involved in the current negotiations. Aside the institutional memory that he brings to the table, Bagudu understands the economic dynamics at play. But he also knows that these issues go beyond what the federal government can offer its workers.
Shortly before he retired after 15 years of meritorious service as founding Director General of the Nigerian Governors Forum (NGF), I sought to know from Mr Asishana Okauru the stand of governors on the minimum wage crisis. He gave me a highly revealing position paper prepared in January by the NGF secretariat. Market conditions, according to the NGF paper which relies heavily on figures from the NBS, “have become tougher amidst indications that the (federal) government did not have the fiscal headroom (the tripod of a robust external reserve balance, Excess Crude Account savings and revenue adequacy) to manage the fallouts of both policies (fuel subsidy removal and exchange rates merger) in the near term.”
Most countries, according to the NGF paper, set their national minimum wage “on the back of price movements such as inflation, cost of living, median earnings (average earnings of the middle half of earners) and the state of the economy.” With several graphs and charts, the paper then referenced the position of the International Labour Organisation (ILO) that “in many of these countries, except where collective agreements cover over 90% of employees, the coverage of collective bargaining as a norm for wage fixing is insufficient to provide protection of minimum standards to a broad majority of workers.” The NGF paper advocates for a decentralised minimum wage system. “This debate has risen in the context of broader economic and social concerns about income inequality, cost of living, labour market flexibility and the fiscal capacity of each state government. In other jurisdictions where this has been applied, two wages still exist, and the higher minimum wage usually applies.”
Citing examples from the United States and the United Kingdom, the NGF paper highlights where the government and Labour get the entire conversation about minimum wage wrong before delving into the challenge of the 36 states. Quoting NLC reports, the NGF paper admits that “many States are yet to implement the 2019 wage review, reflecting indications that they did not have the fiscal headroom to comply with the recommendations of the 2019 NMW review, and that they may not be in a good position to adopt another review in 2024.” The paper added, “In addition to the non-implementation of the 2019 NMW review, new governments still face the burden of legacy salary and pension arrears which had accumulated to N672.6 billion in 2021. It is unclear what the present value of these debts amounts to, but it is estimated at 10% of the total recurrent revenues of States.”
Fiscal reprieve expected from the removal of PMS subsidies has not been sufficient to accommodate a new minimum wage, according to the paper. “The upside of the Naira devaluation has been a sharp growth in exchange gain from dollar denominated revenues, but overall transfers to states have not significantly outperformed records in the first half of 2023. The smoothening of Federation Account transfers to the three tiers of government by fiscal authorities may be attributed to a posture of money supply tightening given the current level of inflation in the country.”
For many States, according to the paper, “it would be unrealistic to expect a full implementation of a wage adjustment in 2024” because current circumstances require additional measures, including “a budget review to identify non-essential expenditures that can be deferred or reduced, debt restructuring to free up the fiscal space, a wage freeze for selected personnel, phased implementation for the new NMW, and the introduction of social safety nets to provide a cushion for workers where job cuts are necessary.”
Given the state of the economy, the paper concludes, a new minimum wage will worsen employment outcomes in the public and private sectors – both in terms of current workforce retention and the potential to make new hires. “A wage hike may lead to higher prices for goods and services and exacerbate the cost-of-living crisis. This is particularly concerning for small and medium-sized enterprises (SMEs), as they are more sensitive to production cost increases. Of those employed, the NBS puts the number of workers in wage employment at 12% while the remaining 88% are self-employed.”
Following the suspension of the strike by Labour on Tuesday, President Bola Ahmed Tinubu directed his Minister of Finance and Coordinating Minister for the Economy, Olawale Edun, to come up with the cost implications of an affordable, sustainable and realistic new minimum wage. But we all know that Edun’s assignment is strictly limited to federal government workers. While the 2020 data on IPPIS Platform revealed that there were 696 Federal Ministries Departments and Agencies (MDAs) with 1,139,633 workers, the Director-General of the Budget Office of the Federation, Ben Akabueze, revealed last August that the federal government’s personnel cost had hit over N5 trillion, with 1.5 million workers on its payroll. Of course, we know that many of these would be ‘ghost workers’, but even at that, we are talking about far less than one percent of our population.
At a period, such as this, when most Nigerians are struggling to survive, it is difficult to fault the argument of Labour for a living wage. But outside the federal government that they can easily arm-twist with the shutdown of the national grid, they cannot enforce anything with the states or private sector. This, of course, is not an argument against minimum wage. It is to point out that no matter what Labour agrees with the federal government this week, most workers in the country will not earn it, and at the end, the people could be worse off.
What the situation in Nigeria today demands is a comprehensive and bold economic policy that increases our productivity and helps create jobs for our young people. That cannot be done when you take one step forward and three steps backwards, as is now the case in Abuja. “At current rates, expenditure on fuel subsidy is projected to reach N5.4trillion by the end of 2024. This compares unfavourably with N3.6 trillion in 2023 and N2.0 trillion in 2022,” according to the latest Accelerated Stabilisation and Advancement Plan (ASAP) presented to the president by Edun which officially confirms that the ‘Subsidy is gone’ claim is audio, as they say on the street. We also need targeted social interventions that include population control. Subsidising healthcare and education as well as other welfare programmes for the most vulnerable of our society is equally important.
In essence, as much as we require a new national minimum wage law, nobody should be under any illusion that it is a solution to the challenge of daily living in today’s Nigeria.
Re: Arsenal, Premiership and All That
By Orufuo Ezaga
Dear Segun,
After reading through your recent column, ‘Arsenal, Premiership and All That’, I feel duty-bound to encourage you and your esteemed group of friends to invest a smidgen of your time and resources in the Nigeria Premier Football League (NPFL). Your article would have left a number of well-meaning local and foreign investors in the NPFL deeply frustrated. I doubt that was your intention, but given the strength of your brand, the damage you have caused is real.
The proliferation of cable TV from the mid-1990s fast-tracked globalisation and saw richly packaged European and American sports properties beamed into our homes. With no protection from our governments, and with infinitely fewer resources, our domestic industry crumbled. Rather than raising concerns about the potentially dire economic and socio-cultural consequences of this on society and plotting a response to safeguard our wealth and civilisation, you the elite became its lead promoters. 24 years on, we still have not understood the damage caused even at the highest levels of our elite converges.
Do you know that Nigerians have since blown over $1 billion on the English Premier League alone through broadcast rights, tourism, merchandising, and even sponsorships? As of 2009, then HITV boss Toyin Subair revealed that they paid $40 million for the rights for Nigeria. Since then, the figure has more than doubled. According to the British media, the EPL rights for sub-Saharan Africa – the poorest region in the world – currently goes for GBP168 million or $213 million yearly.
No country can be wealthier than the collective productive power of its most intelligent minds. The EPL is consumption, the NPFL is production. One increases our poverty, the other reduces it. Surely, we can build a top league. As the famous advertising campaign goes, if man can land on the moon, Nigerians can run a successful football league. The challenge though is captured in IBM legend Lous Gerstner’s writing that “People don’t do what you expect, they do what you inspect”. If you, our talented tenth, choose to stay away from the NPFL, then who should we depend on to inspect and influence the changes we seek?
Our young people are jobless, unengaged and increasingly turning to crime. The Arsenals and Chelseas are neither our history nor heritage; they belong to your English contemporaries. Leave them to build theirs while you build yours. Football is business, it is jobs, it is new wealth creation in society, it is community and national pride. The EPL pays the UK government GBP3.6 billion in taxes yearly, the Super Bowl Sunday alone is worth $11 billion to the US economy annually, the Indian Premier League (Cricket) founded in 2008 now has a media rights value per match ($16m) that’s more than the EPL ($15.7m). Even in its lowly state, millions of Nigerians still depend on the NPFL for jobs and entertainment.
The GTI Asset Management and Trust Limited, a private investment banking firm, has staked billions of investors’ naira on the NPFL in the last two years. Those who follow our football will tell you they have brought stability and higher standards to the league. Do you know that the league now has both a TV partner, the Chinese network StarTimes, and a streaming partner, Propel Sport Africa – a British company? Do you know that eight games are now streamed live worldwide every match weekend, greatly reducing the chances for the corrupt practices you still believe are rampant? Do you know that referees in the NPFL now get paid before matches?
The betting tycoon Kunle Soname has invested billions in his Remo Stars football group. Young tech entrepreneur Shola Akinlade set up Sporting Lagos FC at 38 as a social investment initiative. I hope you know there are three privately-owned clubs in the NPFL and at least two more will join them next season. What about the fact that Lagos is going to have multiple clubs in the NPFL next season?
Good things are happening in our football, Segun. My advice is that you and your group should be more invested in our stories so you can appropriately market the NPFL to the world the way the ‘Oyibo’ people do theirs, especially those in your constituency: the media.
Ezaga is the Anchor, Sports Business with Orufuo Ezaga, Lagos Talks FM 91.3
Plus TV Africa DSTV 408 / StarTimes 308
• You can follow me on my Twitter handle, @Olusegunverdict and on www.olusegunadeniyi.com
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