This Day (Lagos)

25 December 2012

Nigeria: 2012 - Labour's Endless Fight Against Deregulation, Policies

analysis

Linda Eroke writes that 2012 was characterised by labour's endless fight against deregulation of the downstream sector of petroleum industry and other policies of government

The year 2012 was a very challenging one for the organised labour and other stakeholders in the labour industry.

During the year, labour fought endlessly against various reform policies of the Federal Government, especially the planned deregulation of the downstream sector of the oil industry which aims to among others remove the subsidy on Premium Motor Spirit (PMS) otherwise known as petrol.

Other visible challenges faced during this period include infrastructural decay and growing unemployment in the nation's economy. Also, the rising insecurity contributed majorly to the poor performance of industries during the period under review.

Despite these challenges, the Nigerian labour industry has fared relatively well in the last one year as lot of policy reforms were initiated by government, employers and labour during this period as part of measures to boost the welfare of Nigeria workers. Also capacity development measures were adopted to enhance work performance and productivity.

Some of the policy programmes enforced during include (SURE-P), YouWIN and the implementation of Employee Compensation Scheme (ECS).

Fuel Subsidy Debacle

The Federal Government took Nigerians by surprise on New Year Day when it publicly announced the formal withdrawal of fuel subsidy with effect from January 1, 2012.

The pronouncement set in motion the plans by government to commence full deregulation of downstream sector of the petroleum industry which later shot up the price of fuel to as high as N141 per litre.

The sudden pronouncement was viewed by labour as a stab in the back by the federal government, which only recently entered into dialogue with the organised labour on its planned deregulation, in a bid to forestall a looming anarchy.

Obviously, the pronouncement pitched the federal government against labour as organised labour in response mobilised Nigerians for a nationwide strike to compel government to reverse its policy decision or risk mass revolt by Nigerians.

However President Goodluck Jonathan remained adamant on the removal of fuel subsidy insisting that such a tough choice had to be made "to safeguard the economy and our collective survival as a nation."

President Jonathan had, in a nationwide broadcast, argued that continuing with a subsidy regime would undermine the economy and its potential for growth, with serious consequences.

Rather than reversing the policy, the president announced measures to curb government expenditure in line with a belt-tightening regime arising from the removal of the subsidy on petrol that has stirred Nigerians' anger and triggered a clamour for a reduction in the cost of governance.

The president, amid continued protests against the removal of fuel subsidy, cut the salaries of political appointees in the executive arm of government by 25 per cent. He also announced plans to reduce the number of government agencies and parastatals as part of cost-saving measures. The action of the President was in response to the clamour for a reduction of cost of governance by Nigerians.

The SURE Programme was also hurriedly designed in January to douse the tension generated by the sudden removal of subsidy and consequent jump in the pump price of petrol.

The palliative measures announced by government could not pacify labour as the leadership of the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) faulted the tight cutting measures outlined in the president's broadcast, saying they were not enough to address the problems caused by the removal of fuel subsidy.

They insisted that the indefinite strikes, rallies and mass protests will go on as planned, stressing that the "will of the Nigerian people must prevail over that of any government in power".

"The President's address follows the pattern of other documents (like the SURE Programme) by his administration; long in rhetoric and short on basic issues. For instance, the major anchor of the broadcast is that salaries of political office holders are to be cut by 25 per cent. But he failed to tell us how much this will amount to. Is this a mere symbolic gesture or a fundamental contribution to economic recovery?

"Of course one needs to understand all the promises of palliatives from the standpoint of a person who on one hand promises what he does not have, while on the other, and even if he had it, does not intend to deliver it," they said.

They argued that over the years, increasing the prices of petroleum product has become a cheap way of making money for government at all levels to spend, stating that government was not sincere.

However, after a week-long strike and mass protest which paralysed all economic activities across the country, labour suspended its mass action.

The suspension of the strike was announced by the leadership of the NLC and TUC hours after President Jonathan reversed the price of fuel to N97 per litre during a nationwide broadcast.

NLC President, Mr. Abdulwaheed Omar, and his TUC counterpart, Mr. Peter Esele, in a joint statement, said the decision to suspend the strike was taken after due consideration of the President's intervention, in which he cited security issues and willingness to tackle the cabal with Economic and Financial Crimes Commission (EFCC) and review the hard stance on timing and modality for deregulation.

The labour leaders, who described the strike as a major success, said government has been made to adopt the policy to drastically reduce the cost of governance, address accountability issues and current lapses in the oil sector as well as ensure the speedy passage of the Petroleum Industry Bill (PIB).

The unions, while commending Nigerians for their resolve to change the country for the better, said labour will take advantage of the government's invitation to further engage on national issues.

This, it noted, was in line with labour's resolve that the oil industry is too important to be left in the hands of bureaucrats, adding that the labour movement have the patriotic duty to ensure that Nigerians get the best from the nation's natural resource.

The latest development has been the unabating fuel scarcity being experienced in most part of the country.

However, industry watchers have continued to express profound concern over the current crisis in the downstream sector of the petroleum industry. The worsening fuel supply condition is threatening to ground the economy to a halt. The Nigeria Employers Consultative Association (NECA) and the Lagos State Chamber of Commerce and Industry (LCCI) were particularly disturbed over the rather ambivalent position of government on the question of the deregulation of the petroleum downstream sector.

They maintained that government needs to make a categorical statement on this issue in order to aid decision making by investors.

Meanwhile, the current fuel scarcity is already taking its toll on the economy as transportation and distribution costs have gone up astronomically. Also, the tempo of economic activities across the country has slowed down considerably because of the high cost of fuel.

Petroleum marketers, on the other hand, were not comfortable with government position due to failure by government to settle their claims. This implies that marketers that import fuel will bear the full cost of importation, which may be difficult to recover under a regime of uncertainty. The drastic depreciation in naira exchange rate as well as the high cost of fund had also escalated the cost conditions for private sector employers.

Consequently, the policy uncertainty increased the reluctance of banks to fund the downstream sector operations. Thus, the general resultant slow-down in economic activities has precipitated further job cuts in the economy and aggravated poverty.

Given this scenario, industry watchers believe that the problems of the downstream sector of the petroleum industry have lingered for too long and it is about time an enduring and sustainable solution was found. This, they stated, would boost private investment in the sector, create more jobs and enhance the sector's contribution to national output.

Unemployment, Job Losses

In the last one year, thousands of job losses have been recorded from virtually all sectors of the economy. The economy is being threatened by the challenge of creating productive jobs in a bid to sustain economic growth and maintain social cohesion.

Although the federal government claims to have recorded an average growth rate of seven per cent, the fact still remains that these statistics have not translated into improved quality of life for Nigerians and better operating environment for business. This is so because the reality of existence and survival in the economy points in a different direction as pervasive poverty, high unemployment, dilapidating infrastructure, and growing insecurity still abound.

For instance, job losses in the country have more than doubled in the last one year with figures jumping as high as 25 per cent (World Bank report) though analysts believe the has gone higher. According to the National Bureau of Statistics (NBS), Nigeria's unemployment rate increased to 23.9 per cent in 2011; compared with 21.1 per cent in 2010 and 19.7 per cent in 2009.

Today, a lot of factories have closed down, banks are right-sizing, manufacturers are relocating to neighbouring countries, and the oil companies are not left out as big oil giants are struggling to remain afloat.

During the year under review, a spike in retrenchments became visible in nearly all sectors with a large per cent of these registered in construction industry followed by manufacturing, textile, banking and oil industry. Also, most firms had been particularly vulnerable to the recession with more than 50 per cent of liquidations happening in the small to medium enterprises.

The country's dire employment crisis was again brought to the fore recently, when the Statistician-General of the Federation, Dr. Temi Kale, put the number of jobless Nigerians at 20.3 million though many believe the figure was understated as the level is believed to have risen to over 40 million.

This followed the confirmation by the National Directorate of Employment (NDE) that a larger percentage of the employed are youths. Of Nigeria's 150 million population, 40 million are unemployed. Currently, 45 per cent of the population is between the ages of 15 to 40 years meaning that unemployment mainly affects the youth.

This situation portends disaster for any nation. No country can expect peace and progress when its youths are kept idle, angry and unfulfilled. It is a recipe for social unrest and disaster.

More worrisome is the fact that the employment crisis in the nation has persisted in spite of government's efforts to address it. The federal government, during the year came up with different programmes such as the Youth Empowerment Scheme (YES) and Youth Enterprises with Innovation (You-WIN), to create jobs for the teaming unemployed youths. These initiatives however have not significantly improved the situation.

Industry watchers have maintained that government alone cannot provide employment for the people. According to them, the best way government can create jobs is to provide enabling environment for the private sector to thrive.

"Flourishing private sector initiatives will provide the much-needed employment opportunities. They will do the job better than public initiatives such as You-WIN that can only accommodate limited number of people, and are oftentimes bedeviled with nepotism and other patronage. These schemes are also often not properly managed, and they are largely unsustainable", they explained.

Casualisation of Workers

During the year under review, the country's effort to increase employment has not been followed by assurances of decent work and worker protection given the increasing number of contract-based workers.

The global economic and employment crisis have continued to threaten the future of workers all over the world, particularly in developing nations like Nigeria.

Though they are efforts by government to boost employment generation in the country, this has not been followed by assurances of decent work and worker protection given the increasing number of contract-based employment in the nation's economy.

It is sad to note that permanent jobs are gradually being eroded by an increasing reliance by employers on labour hire via employment agencies. This is because employers have come to realise that dismissing workers with no rights to severance pay or notice periods is a cheap and easy way for them to reduce their workforces. This trend has had significant and far reaching impacts on employment given the dangers that precarious employment poses for society.

According to available statistics, about 49.9 per cent of workers in the oil and gas, tele-communication and cement manufacturing companies are on casual employment. Also, a recent report published by the Campaign for Democratic Workers' Rights in Nigeria, a non-governmental organisation, revealed that over 45 per cent of Nigeria's labour force is made up of casual workers.

However, all hope is not lost as the Senate during the year announced that it is putting finishing touches to a Bill that would ensure job security for Nigerians and put an end to casualisation of workers by some employers.

Chairman of Senate Committee on Labour and Productivity, Wilson Eke, made the disclosure in Ilorin, the Kwara state capital. Eke said the decision to enact the law became necessary because of the untold hardship many Nigerian workers were going through in the hands of many shylock employers.

He said: "For those employers who derive pleasure in employing workers for perpetual casual labour, the end of the road has come when the bill becomes law in Nigeria which is going to be soon. It would be illegal to have casual workers who have spent specified years in Nigerian industries."

Eke explained that when the law becomes operational, it would make it mandatory for employers of labour to offer permanent job opportunities to those workers on casual employment after spending some minimum number of years on the job.

He noted further that the laws guiding employment in the country should protect workers rather than exposing them to the risks of job insecurity.

Eke said: "The issue of job security is very vital. It is primarily caused by lack of enough job opportunities which the Federal Government is presently addressing. So, government must indeed create more jobs because lack of job is the major cause of workers taking up casual jobs in Nigeria.

"But despite the situation, there should be a law to stipulate the minimum number of years with which a worker should work as a casual worker. Besides, such workers must be compensated if they are not given permanent appointment. We are working on this as members of the Senate Committee on labour."

Power Sector Reform

During the year, the Federal Government and labour unions in the power sector finally resolved the lingering labour issues that had hitherto delayed proceedings in the government's reform of the nation's power sector.

The disagreement over the workers' severance package had remained the major setback in the privatisation of the PHCN and the implementation of the Power Sector Reform Act 2005.

Meanwhile, the two parties had been involved in series of discussions and negotiations since May last year, with a view to resolving the said labour liabilities. But after the meeting that lasted for seven hours at the office of the Secretary-General of the Federation (SGF) in Abuja, both parties signed to pay all the claims by the labour unions of PHCN in relation to the labour liabilities.

As a result all employees of PHCN, totalling about 50,000 and 4000 unregularised staff, will be paid off as part of the full privatisation of PHCN's assets. The implication of this is that PHCN workers that will be absorbed by new owners will have a new condition of service in line with agreement with Labour.

According to the agreement, "three months salary in lieu of notice shall be paid to all active employees of PHCN that have served more than 10 years and one month salary in lieu of notice for employees that have served for a period of less than 10 years in service."

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