Perils of salary increase in Nigeria



Kogi State Government earlier this year, enjoined their workers to tighten their belts following the brisk fall in the federal allocations accruing to the state. In particular, only workers on grade level 1-6 were to get 100 per cent of their salaries while the rest would be paid 60 per cent of their salaries.

The government’s justification was that between March and April alone its revenue dropped by N1.2billion leaving them with a balance that was less than their total monthly wage bill. The state received the sum of N3.7 billion from Federation Account in March, while in April it got only N2.5 billion, whereas the monthly wage bill stood at N3.2 billion.

Predictably Labour in the state rejected the decision with the state chapter of the Nigeria Labour Congress (NLC) insisting that it was not part of any meeting convened by the government to discuss the welfare of workers vis-à-vis the dwindling funds of the state.

“The decision by the state government to pay 100 per cent to officers on grade level 1-6 while those on seven and above will be paid 60 per cent will never be acceptable to the labour union. Workers in the state were not invited for discussion on how to go about the alleged short fall in the monthly allocation to the state before the decision was taken”, the state Vice Chairman of NLC, Alhaji Suleman Abdullahi stated. 

This scenario more or less reflects the situation in many states of the federation where salaries are owed workers and pensioners for several months, promotions are stalled for years because of the inability to back it up with funds, and issues affecting workers’ welfare such as housing, transportation, 28 days allowance on transfer from post, repatriation allowance, burial expenses, death benefits, mandatory training, among others have become relegated to the background.

In fact, it got to a ridiculous height recently when the NLC at the national level was compelled to reveal that about 20 states of the federation were unable to pay workers’ salaries ranging from one month to as many as nine months. This elicited the intervention of the Federal Government with the approval of a bailout of N400billion to enable the states pay their workers.

But how long can the Federal Government continue to bail out the states?  

The problem is compounded by the fact that the national minimum wage approved in 2010 by President Goodluck Jonathan is due for re-negotiation and the states and the federal governments are not prepared to entertain such request.

The former deputy vice president of the NLC, Comrade Issa Aremu shot the first salvo last year when he urged the Federal Government to be ready to review upward the minimum wage from the approved N18, 500 in accordance with the provisions of the Minimum Wage Act.

The 2010 National Tripartite Committee on National Minimum Wage, headed by retired Justice Alfa Belgore (GCON), recommended then that to avoid an ad hoc approach, the minimum wage should to be reviewed every five years against the backdrop of increasing costs of living and deepening poverty of working people.

“The idea of periodic review is to avoid high increases that often characterised 10-year period of stagnation. In some countries, minimum wages are adjusted almost every year to reflect the cost of living. Some countries have wage indexation according to which minimum wages are adjusted automatically to the rate of inflation”, Aremu argued.

According to him, what happens to Nigeria’s 170 million human resources was as important as what happens to 2.5 million barrels per day, noting that it was scandalous that Nigeria looses as many as 900,000 barrels of crude oil to theft. “This is unacceptable for a nation with almost 200,000 military personnel and an Army that is ranked as the 4th in Africa and 34th in the world”, he added.

The question however, is can the nation’s economy effectively support any increase in national minimum wage at this time? 
Edo State Governor, Comrade Adams Oshiomhole believes that the country can sustain the increase if things were done the proper and right way by those in authority.

Speaking at Abuja, the Governor called for an upward review of workers’ salaries to reflect socio-economic realities in the country. To him, the Nigerian worker, especially in the public sector, remains grossly underpaid, hence the demand for wage increase by labour movements makes economic sense.
He, however, stressed the need for all tiers of government to vigorously fight the scourge of “ghost workers’’ and block all leakages to ensure steady payment of salaries to workers.‎ Besides, he urged governments to employ all possible means, including modern technology, to cut down on financial leakages in government payroll.

For the NLC President, Comrade Ayuba Wabba, it is auspicious at this time to demand for a review of the present minimum wage paid to workers in accordance with the economic realities. Speaking in Abuja shortly after the National Executive Committee (NEC) meeting, he said that an increment of workers salary would help to reduce corruption in the polity.
According to him, it was unacceptable for Nigerians including the labour force to live in abject poverty while few privileged people continue to steal the nation’s resources and starch it in foreign banks. He disclosed that the NEC would soon demand from government and the tripartite partners the review of the national minimum wage.

However, Wabba acknowledged the challenges of implementing a wage increment presently when he noted that the pitiable state of the nation’s economy has become of great concern to the labour union as it has affected the working class resulting in many states not being able to pay salaries as at when due.

The Association of Senior civil servants of Nigeria (ASCSN) has demanded a national minimum wage of N46, 000 for the Nigerian worker having resolved that the N18,500 was no longer acceptable in the face of the ”worsening hardship facing workers”. The Secretary-General of ASCSN, Basir Lawal, explained in Lagos that the new wage being sought by workers was arrived at after the association’s meeting with the National Public Service Joint Negotiating Council.

“In the past one year, we presented a proposal for salary review to the Federal Government but the government said that the price of crude oil had fallen. We argued that if the price of crude is 30 dollars per barrel and the resources of the country are well managed, money will be enough to pay workers decent salaries.
He said that the joint negotiation council used the table for the payment of N18, 000 minimum wages to arrive at the N46, 000 being demanded. If the government believes that the amount will create crisis, we will tell them what to do to ensure that everybody will be carried along.’’

On the part of the Trade Union Congress (TUC), efforts were on to harmonise the N46,000 proposal put forward by the ASCSN with figures from other affiliate unions. The TUC President, Bobboi Kaigama, who disclosed this, said that at the end, the harmonised position will be presented to the government. “The NLC and TUC have not harmonised our position or adopted a common position. The tripartite negotiations will commence this year”.

Recently in Lagos, at the inauguration of a National Council of Industry, an umbrella body of industrial unions established in Denmark in 2012, Aremu who is the president, African region of the Council, again lent his voice to the call for the minimum wage increment.

“Beyond every reasonable doubt, the current minimum wage of N18, 000 is no longer tenable for Nigerian workers because of a number of factors. Today, the minimum wage in Nigeria is N18, 000. It must be stated that the current minimum wage was negotiated in 2010, when the exchange rate was still better than what we have now. In 2010, the current minimum wage equaled $120 per month, but as we speak, it is about $81 per month. That means the minimum wage has fallen terribly by $38.1. This is as a result of inflation and massive devaluation of Naira, which is currently being exchanged at N230 per dollar. 

Without doubt, the minimum wage needs to be reviewed and we are using this period to call on President Buhari and the National Assembly to put machinery in motion to ensure that the increment is effected.”

But there are discordant tunes from the government and the private sector employers. Labour believes that the issue of income inequality and poverty in the country cannot be resolved without addressing the question of salaries and wages for working people.
Their argument is that there was a convoluted linkage between income, consumption and production. Dazzling as their argument maybe, they have to marry it with the ability of the States of the federation to cope with financially given the fact that since inauguration in May this year, most of them have been surviving on loans and even have to rely on the Federal Government’s bailout to pay workers salaries.
The thinking in the federal circle is far from wage increment. “The Federal Government concern today is how to enthrone efficiency and increase productivity in the public service as well as ascertain the actual number of persons on the government payroll, eliminate ghost workers, plug all avenues of leakages, and ensure that workers get their salary as at when due”, a source at the Federal Ministry of Labour volunteered, adding that President Muhammadu Buhari was very concerned about the inability of many states to pay workers’ salary.

This, the source noted informed the bailout to states as well as the recent Federal Government circular in which the Presidency ordered federal ministries, departments and agencies (MDAs) to, within seven days, compile the names of all public service employees being owed arrears of salaries and allowances, and be ready to pay them without further delay.
Also, States across the country were also expected to begin paying their workers soon due to the disbursement of a bailout approved by President Buhari in July.
Organised private sector employers are not averse to an increase in wages but are weary of the timing because of the economic downturn that was adversely affecting the sector. The Director-General, Nigeria Employers’ Consultative Association, Mr. Olusegun Oshinowo, said that the biggest employer of labour, which is the government, was still struggling to pay outstanding salaries and wondered what will be the rational for another increase at this time.

“It is absolutely wrong timing, because the economy is comatose and not less than two thirds of the states are owing workers not less than three months’ salaries. What will be the basis for increasing salary when the biggest employer in the economy which is government is struggling with existing wages?” he stated. He noted that labour’s standpoint was normal but that the expediency and readiness should be taken into account.

According to him, salaries and wages constitute about 80 per cent of the government’s recurrent expenditure and will increase further if a policy on new minimum wage was put in place, advocating that emphasis should be on every stakeholder ensuring that more people were employed and that the jobs were secure.

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  • Collective Governance

    I think Nigeria as a country should start thinking how best states should be independent in generating their own income and not just wait on federal allocation as the main stay. We create states that cannot fund herself nor feeds her workers, this is quite pathetic! If Nigeria is trying to copy American democratic process, they should also learn that states in America generates their own revenue and pay taxes to the central government, so Nigeria can do same and stop bailing out state governments who had used federal allocation to fund election at the detriment of their own people.

  • What percentage would the governor get? so people at the top who are already doing well will continue to be made whole while they crush the little man below