Nigeria: Minimum Wage - Why Govt-Labour Negotiation Ended in Stalemate

Photo: Vanguard
(file photo).
1 July 2019

Labour's demand for percentage increase across board for all the harmonized salary structures and Governments insistence on an equitable and sustainable salary adjustment is the reason why negotiation on the new minimum wage has stalled.

A final meeting of the committee set up by the federal government to negotiate the consequential adjustment arising from the new minimum wage last Thursday ended in a deadlock after representatives of Labour insisted on percentage increase across board.

The meeting was a follow up to the inaugural meeting of the committee held in May.

The Head of the Civil Service of the Federation, Winifred Oyo-Ita, is the chairman of the committee while Chief R. Egbule, Chairman, National Salaries, Incomes and Wages Commission, is the Secretary.

The signing of the National Minimum Wage Bill into law by President Muhammadu Buhari in April makes it compulsory for all employers of labour in Nigeria, including the federal government, to pay their workers a minimum of N30,000, which represents a 66.67 percent increase.

Before the new law, the minimum wage was N18,000. But the development prompted agitation from labour unions in the country for salary adjustments across all levels which led to the establishment of the 22-member technical committee to work on the consequential adjustment arising from the N30,000 new national minimum wage.

Ten representatives of Trade unions nominated by the Joint National Public Service Negotiation Council are members.

But the meeting failed to take a final decision after representatives of labour demanded percentage increases across board instead of the salary adjustments proposed by the federal government.

Government had proposed, in addition to the adjustments of the minimum wage of those who are already on level one to level six to reflect the new minimum wage, a consequential salary adjustment of N10,000 per month across board for all the harmonized salary structure to ensure equity.

This gave rise to the additional cost implication of N158,771,830,326.00 per annum, which had already been captured in the 2019 budget.

A source in the committee revealed that government arrived at the N10,000 increase across board, after studying the recommendations of the presidential technical advisory committee on implementation of the minimum wage.

The committee, which submitted its report in March, was headed by the renowned economist and businessman, Bismarck Rewane. It was given the mandate to advise government on how best to fund, in a sustainable manner, the additional costs of implementing the anticipated increase in the National Minimum Wage.

But labour leaders were adamant that officers on level seven to 14 should also get an additional 30 per cent of their salaries. While those on level 15 to level 17 should be have 25 per cent of their current monthly earnings added to their salaries.

If Government accepts labour proposals, the resultant additional cost would be about N500,813, 183,739.00 per annum which is far above the budgeted sum.

Government considered the consequential salary adjustment demanded by Labour as unsustainable in view of the economic situation of the country and especially when most of those to benefit from it were those in the high-income bracket.

For instance, if Government implements labour demand, those on GL 08 Step 1 who're earning N666,184.00 per annum would now earn N866,039.00 and those on GL 17 Step 1 earning N4,183,600.00 would earn N5,229,500.00.

This demand poses the problem of equitable adjustment in salaries occasioned by the new minimum wage.

It would then mean that while those on level 1-7 get additional N12,000 per month, those on GL 08 Step 1 would get an increase of N16, 654.58 per month and GL 17 Step 1 gets N87,158.33 per month.

If Labour was concerned about the plight of Nigerian workers, there is no reason why it should reject Government proposal of N10,000 increase for those at the top while those below get N12,000.

Previous minimum wage review had also not reflected percentage increase as Labour is now demanding.

In 1991 the minimum wage was reviewed from N250 to N5,500 and in 2000 from N5,500 to N18,000. But the percentage increase was not reflected in the consequential salary adjustment.

When President Buhari signed the minimum wage bill into law in April, he promised to adjust salaries across board which is what it has done.

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