The national minimum wage negotiation talks that broke down on Friday remind me of the social media story about the Professor of Physics who did not come to school one day. When his students phoned to ask why, he said he was conducting research at home on "The thermo-aqua treatment of ceramics in a constrained environment." Shorn of its highfalutin academic language, the professor meant that he was washing dishes with hot water under the supervision of his wife!
If everything goes according to plan [according to threat is more like it], public and private sector workers all over this country would have downed tools by midnight on Sunday at the start of a "total, indefinite general strike" called out by the country's two central labour unions, Nigerian Labour Congress [NLC] and Trade Union Congress, TUC. It could result not only in the closure of offices, schools and factories but could hamper transport services, disrupt fuel supply, lead to long fuel queues, re-emergence of petrol black markets, closure of banks and disruption of social and economic life.
No one is happy that it came to this. In January, President Bola Tinubu set up a tripartite committee of Federal and state governments, Organised Private Sector [OPS] and Big Labour to negotiate a new national minimum wage in line with the National Minimum Wage Act 2019, when the current minimum wage of N30,000 a month was adopted. It is subject to renegotiation every five years. The committee has been negotiating [arguing is a better word] for five months. Not privately, as we expected, but very publicly because all three sides at the table made sure that the public knew what its position was at the supposedly confidential negotiating table. In five months the parties could not agree; in fact, their respective positions are probably further apart now than they were at the beginning.
Mostly because, I think, all three sides were negotiating in a Prof-style constrained environment. At the weekend I took a look at a newspaper info graph that summarised the positions of the three parties in the stalled minimum wage talks. The gulf between their positions is wider than the one between Ukraine and Russia on their border war. It is wider than the Strait that separates China and Taiwan on the question of Xi Jinping's "One China" policy. It is harder to bridge that the positions of Hamas and Israel over Gaza. In fact, it is wider than the Pacific Ocean that separates China and USA in trade, currency and geopolitical matters.
As at Friday afternoon when the talks broke down, Big Labour was demanding a national minimum wage of N494,000 a month. It was negotiating in a very constrained environment because since the last upward wage review in 2019 and especially since last year, with galloping inflation, huge increases in fuel, food and transport prices due to withdrawal of fuel subsidy and free float of currency, workers are under extreme pressure from their families, landlords, transporters, school proprietors, hospital owners and drug stores, not to mention food creditors. Labour leaders are therefore under pressure to extract from government and OPS a wage structure that can reclaim lost standard of living ground.
From Labour's point of view, it made a big concession because its initial demand was in the region of one million naira a month for the lowest paid worker. That meant an office sweeper earning the current minimum wage will immediately leapfrog to earn more than what a permanent secretary takes home in legal wages today. When government raised its offer from N48,000 a month to 57,000, Labour responded by reducing its demand to N500,000. When government further increased its offer to N60,000 or double the current minimum wage, Labour reduced its demand to N497,000 and still later to N494,000.
Good, that is some movement, but can the Federal Government pay such a wage? Don't forget, a new minimum wage is quickly followed by an across-the-board wage increase for all Federal workers. Even if it is done more carefully than was done in the past with smaller percentage increases for workers in the higher brackets, it will still be a huge increase in the wage bill. Minister of Information Mohammed Idris summarized Federal Government's dilemma at the weekend when he said Labour's demand will push its wage bill to N9.5 trillion per annum, which he said "is capable of destabilizing the economy and jeopardizing the welfare of over 200 million Nigerians."
Federal workers' current number is 1.2 million. This year's Federal budget is about N29 trillion, so 0.006% of citizens will grab one third of the Federal budget as wages alone, apart from what they will add unto themselves as perks and underhand grabs. It is however a bit better than that, because these 1.2 million workers support millions of others as family members, kinsmen and women and some of them donate to mosques and churches. Still, Federal Government has many things to do, including funding the police and military, building key infrastructure and maintaining tertiary educational and health institutions, not to mention paying debt, since it has already borrowed and spent many years' earnings in advance. Sure it has reaped a lot of money by ending the fuel subsidy regime and floating the naira, but its balance sheets still do not add up. What Labour is demanding, according to Idris, is a 1,547% wage increase. This will make even Udoji to blush and upstage it as the greatest governmental Father Christmas ever in the history of Nigeria. In 1974 General Yakubu Gowon was not operating in a constrained financial environment; his Federal Treasury was awash in money following OPEC's four-fold increase in oil prices in 1973. This time around, Oga Tinubu is operating in a constrained environment, under the close supervision of pipeline vandals, hungry citizens, restive trade unions and local and foreign creditors.
Truly, in this matter, the amount of money paid to a worker as wages is not the most important thing, but its overall purchasing power vis-a-vis the cost of living. To that extent the Federal Government has a [small] case when it pointed out that it has invested in many other areas, such as N35,000 wage award for all treasury-paid Federal workers, procurement of CNG-fueled buses and conversion kits, N125 billion conditional grant to MSMEs, N25,000 each to be shared to 15 million households for 3 months, N185 billion loans to States to cushion the effects of fuel subsidy removal, N200 billion to support the cultivation of land to boost food production, N75 billion to strengthen the manufacturing sector, N1 trillion for higher education student loans, release of 42,000 metric tons of grain from strategic reserves, distribution of 60,000 metric tons of rice from the rice millers association, free Abuja Light Rail rides till end of the year and 90% subsidy on health costs for Federal Civil Servants registered on NHIS. Were all these promises actually delivered? I cannot swear to it, but they should be.
If Federal Government is operating in a constrained environment with respect to the minimum wage issue, then state governments are operating in a pressure cooker. Many of them have still not implemented the N30,000 minimum wage of 2019, though I believe that is criminal. The six governors that represented them at the talks did not even offer a figure. Instead, they put forward a paper explaining their constraints. They said fuel subsidy withdrawal and naira float that fueled inflation forced state governments to adjust their budgets, reallocate resources to palliative measures and adjust capital expenditure appropriations to accommodate variations in critical infrastructure projects. They said while subsidy removal and naira float led to an increase in nominal FAAC revenues, coinciding with a surge in headline inflation, the real value of FAAC allocations increased only marginally from N1.39 trillion in first half to N1.52 trillion in the second half of 2023. "This indicates that the additional revenues, in real terms, have shrunk with the increase in monthly inflation that followed both policies." In other words, state governments did not get much more money as we think and may not be able to pay higher wages.
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Organized private sector was represented at the talks and was said to have agreed to the N60,000 new minimum wage. Let's hope it can pay without job losses. But Local Governments were not even there. If state governments cannot pay, is there any chance in [expletive] that Local Governments can?
The obvious danger of pushing the governments and OPS to pay much higher wages is they will look in the direction of reducing their workers. It will also reopen the old question of whether we need so many people in the public service. It happened before. In 2000 AD when President Obasanjo increased the minimum wage to N7,000 a month, we asked then Borno State Governor Mala Kachallah, who visited us at New Nigerian, why his state was yet to pay the new wage. He said Borno State had the country's second largest workforce of 30,000 and cutting it must precede a wage increase.
Alhaji Mala gave an unforgettable example. He said, "The Poultry Department of the Borno State Ministry of Agriculture, their last hen died in 1981. But they still have 671 workers including many vets, and every year they bring a long list for promotion." Big Labour, please let us return to the negotiating table with an honest broker and work out something that accommodates the just concerns of all sides. Before someone peruses his labour force with Alhaji Mala Kachallah's old eye glasses.
