Wage increment as elixir to economic growth

It is indeed no longer news that the most available economic indices on the Nigerian economy continually points to the south in the last few months.

Expectedly, the solutions as proffered by ‘experts’ seem to have some ideological, political, social, ethnic and professional colouration as far as the findings of the National Bureau of Statistics (NBS) of 2.24 per cent contraction of the Gross Domestic Products (GDP) in the third quarter of the year.

While it could be argued that an amalgam of all these could or some of them may offer an early exit route for the economy, labour movement has continually insisted on government increasing the wage of workers especially the minimum wage in order to side-kick the consumer spending once again.

The Nigeria Labour Congress (NLC), insisted that government must introduce policies that encourage spending to get Nigeria out of the present economic recession.

The General Secretary of Congress, Dr Peter Ozo-Eson, while reacting to the findings of the National Bureau of Statistics (NBS) on the third quarter Gross Domestic Product (GDP) of the economy, explained that the findings have indeed shown that government has been doing so little in taking Nigeria out of the economic recession.

He explained: “The findings of the National Bureau for Statistics (NBS) have shown that all the statement and predictions by government functionaries that the recession would be over soon is not happening. What is happening is not surprising because government has not put in place any noticeable package of policies to take the economy out of recession. Without adequate policies, the economy would not just turn itself around.”

Dr Ozo-Eson, who is an Associate Professor of Economics, insisted that NLC has articulated in the past that when a country is in recession what is needed is inflationary policies to stimulate aggregate demand to get out of it.Rather than deflating the economy, Ozo-Eson said government is more concerned about how to fix the fiscal governance balancing its books.

“It is ironical that at a time Nigeria is in recession, government plans to put in place all manners of taxes that would further improve remove income from the pockets of the people. When government does not pay salaries fully or as at when due, workers who constitute major segment of the populace from the demanding goods and services which will further recessionary indices. What government needs to do is to introduce both fiscal and monetary stimulus and increase the minimum wage so as to shore up aggregate demand”, he explained.

On his part, the Executive Director, African Centre for Leadership, Strategy and Development, Dr Otive Igbuzor, blamed successive governments to failing to use proceeds from oil sale to build foundation for industrialisation and paying lip service to economic diversification.

His words: “Over the years government has been taking about diversification but there have not operationalise the slogan. What other countries like Botswana did is to use the oil money to develop infrastructure and industrialisation so that people will work in the industries. One of the concerns we have raised over the years is that economic growth in Nigeria has been a jobless growth. Few people can be involved in entrepreneurship but the whole society cannot be involved in an entrepreneurship that will engender development.”

He listed sectors such as agriculture, tourism and environment and infrastructure, which are job-generating sectors, but have remained largely untapped.Igbuzor highlighted that the economic development is not a magic that can be achieved within a short period of time, saying, “that is part of the problem we have in Nigeria. We always want quick fix. Running a country is about having good strategies, good policies and running with them with strong monitoring and evaluation mechanisms.”

He stressed that government must move swiftly to have a holistic development strategy that deals with how government is going to tackle all the developmental problems confronting the country.

He added: “There are basic laws that government needs to fast track their passage such as the Petroleum Industry Bill (PIB). The oil sector remains the mainstay of the economy yet there is no clear law that regulates it to the point that investors are confused about the policy driving the sector. Government also needs to accelerate reforms of the public sector. No government needs to accelerate reforms here so as to accelerate reform in the budgeting processes and move the reform in the anti-corruption war and have a national action plan on open government partnership.

“When you in recession or depression, what is needed is an expansionary policy. What needs to be done is know because we have advocated the issues over the years. What is needed now is the political will, strategy and people to implement what needed to be done.”

Unpacking the inherent message the finding brought to the fore, speaking to the CNBC, a renowned Economist, Henry Boyo, blamed non-adherence to the indices that should drive any economy for the present predicament.

He argued that Nigeria has reaped foreign currency bountifully over the last two decades without any prove if what was earned from crude oil sales improved the economy in any manner.

Boyo submitted that inflation rate which is trending towards 18.3 percent may probably hit 20 per cent if the level of excess liquidity is not controlled.He also disagreed with the notion that Nigeria has to spend its way out of recession.

Speaking further to CNBC, he said: “If anybody expects that we would ever get out of the woods, in terms of foreign exchange shortage or real economic indices that would drive the economy the monetary policy rate and the inflation rate have to go together. The two have to work in tandem. If you have a situation where the monetary policy rate is continuously at 14 per cent and is under pressure to remain at 14 per cent when if anything the indications are that it should have gone up. And if it goes up what happens? Inflation goes up and of course your salary whether you like it or not, without you knowing anything about it, has been cut in half, both in terms of inflation at 20 per cent and an exchange rate that took away 50 per cent of your income.”

Boyo insisted that the route out of the economic doldrums is for the Central Bank of Nigeria to fund the real sector in order to stimulate economic activities.