Nigeria Labour Congress Demand for the Review of the National Minimum Wage and General Wage Review

Today, Nigerians who are lucky to have jobs are finding it increasingly difficult, if not impossible, to survive on their monthly pay. The major reason for this is that the pay of the Nigerian worker is not only one of the lowest in the world; it has also not improved as it should in the face of changes in market conditions. Workers in the public sector are particularly worse off.As huge revenues have continued to be acquired from the sweat of workers, the pay and conditions of workers have continued to deteriorate; workers have increasingly been excluded from the wealth created by their labour. In Nigeria, the difference in pay between managers and workers is not only one of the highest in the world: out of every N1 paid as wages, managers collect more than 80 kobo while workers receieve less than 20 kobo; the difference has been increasing over the years.At the same time, owners and managers of banks, top government officials and members of the political class have seen their pay a nd wealth swell ostronomically while workers have had to survive on starvation wages. Workers can no longer survive on what they earn; the situation is made worse by the fact that those who work also have to support family members who form part of the huge army of the unemployed. It has become crystal clear that there is an urgent need for an upward review of the national minimum wage and an upward general review of wages and salaries.History of wage reviews fought by workers This is not the first time that workers would be asking for a general upward review of wages and an increase in the National Minimum Wage. Between 1945 when workers staged the famous 45 days general strike for a Cost of Living Allowance (COLA) and 2007, when the demand won by workers for a 25% general wage through the Ernest Shonekan Wage Consolidation Committee was arbitrarily cut down to 15% by Obasanjo, workers have struggled at 15 times to have wages improved and a national minimum wage legislated upon.But the struggles produced notable victories for workers and the NLC, it was usually the case that: the National Minimum Wage was always set below the minimum wage needed by workers to survive. Because of the inadequacy of the wage, some state governments elected on their own to pay more. Even then, there were also some 1 state governments that pay less than the stipulated national minimum wage. The result was that workers always could not cope. The wage reviews were largely unstructured; sometimes negotiated wages were changed by government through circulars; at other times, government effected unilateral wage increases.Agreements reached with government were sometimes distorted at implementation or not implemented at all by government. For example, the 2000 Wage Review Agreement provided for a further 25per cent wage increase for workers with effect from May 1, 2001, and 15 per cent wage increase with effect from May 1, 2002. This was not implemented. Following industrial dispute over this a 121/2 percent increase rather than the 35 per cent agreement in 2000, was signed in 2003. But in the end, only an increase of between 4 and 12 1/2 per cent was implemented by the Federal Government.Although the Shonekan Committee was set up against this background and recommended a 25% increase in salaries, Obasanjo unilaterally implemented a 15% increase in 2007. Government also failed to abide by the timeframes set out for subsequent negotiations with workers. Workers always had to fight to get government to agree to collective bargaining even when the procedure was agreed in previous negotiations. Today, workers find that they have to fight yet again to get government to agree to negotiate a new National Minimum Wage and a general upward review of wages.Rationale for Upward Wage Review today There are several reasons why there must be an upward review of workers wages today. The consequence of the abdication of the agreed approach to the implementation of the phased-wage increases has been that wages and salaries are today sharply depressed and incapable of meeting the basic needs of most workers. In the last one year, inflation has intensified with the cost of living index in the urban sector increasing by over 14 per cent. The disproportionate increase (20. 9 percent) in the cost of food means that the erosion in the real wages and salaries of workers is alarmingly severe.The process of monetizing and consolidating in-kind benefits which were hitherto not taxed has resulted in an escalation of the tax paid by workers. This has further depressed the real take home pay of workers. 2 All over the world, salary increase in the public sector is underlined by the principle of equity and the need to bridge social inequality in the face of widening economic and social gaps amongst citizens of a country. In Nigeria, while workers’ salaries increased by 15 percent between 2006 and 2007, those of political office holders increased by over 800 percent. The 2008 increase in the compensation of political office holders has further aggravated the disparity (Table 1). On average, their compensation package has been doubled. We need to reduce this disparity for greater equity, productivity and morale. TABLE 1: Salaries of Political Office Holders (Pre and Post Consolidation) S/N Categories 1 Special Assistant to the President; Chief Speech Writer to the President; Chief Press Secretary to the President Members, House of Representatives; Deputy Chief of Staff TTP; Senior Special Assistant, TTP. Ministers of State; Senators; Principal Officers of the House of Representatives; Special advisers TTP.Deputy Speaker, House of Representatives; Minister; Secretary to the Government of the Federation, Head of Civil Service of the Federation, Chief of Staff TTP; National Security Adviser; Chief Economic Adviser; Inspector General of Police; Chairmen, Federal Civil Service Commission, Federal Character Commission, National Salaries, Incomes, & Wag es Commission, Revenue Mobilization Allocation & Fiscal Commission. Deputy President of the Senate; Justices of the Supreme Court; President, Court of Appeal. Speaker of the House of Representatives. HASS (Basic) 626,700 865,200 CONSS* 4,392,012 13,102,402 3 4 1,015,700 13,374,240 1,194,600 15,094,426 5 6 7 1,403,700 15,240,500 1,649,400 16,348,926 Vice-President of the Federal Republic of Nigeria ; 1,938,000 21,524,164 President of the Senate; Chief Justice of Nigeria . 8 President, Commander-in-Chief of the Armed 2,506,000 24,954,405 Forces of Nigeria . *Source: National Salaries, Incomes and Wages Commission and Revenue Mobilization Allocation and Fiscal Commission, Abuja 3 In Sub-Saharan Africa (SSA), Nigeria ought to be paying one of the highest minimum wages, given its resources and level of development.The reality, however, is that the existing minimum wage in Nigeria is one of the lowest in Africa. Table 2 presents the data for Sub-Saharan Africa. The data in the table takes adequate account of the need to adjust the wages to differences in the cost of living or what is called the Purchasing Power Parity (PPP). Table 2: Minimum Annual Wage Levels in African Countries ($USD) Country Minimum Special Notes PPP PPP-Based Wage Factor Minimum Wage Angola 1511 1. 975 2984. 23 Botswana 3011 2. 106 6341. 17 DRC 468 2. 077 972. 04 Kenya 948 2. 534 2402. 3 Lesotho 1080 For Manufacturing 1. 847 1994. 76 Madagascar 336 3. 107 1043. 95 Malawi 407 3 1221. 00 Mozambique 1177 2. 129 2505. 83 Nigeria 550 2. 274 1250. 70 South Africa 2780 Farm Minimum 1. 651 4589. 78 Wage: $975 Swaziland 1369 1. 958 2680. 50 Tanzania 1680 2. 8 4704. 00 Zambia 1147 1. 81 2076. 07 Average 1266 2674. 33 The current national minimum wage of N7,500 is far below the minimum cost of providing basic needs for the worker and his / her immediate family. Our survey shows that today the minimum cost of providing for basic needs is N58,200 (Table 2).This estimate is based on threshold hardship levels in which 6 or 8 people may be forced to live in one or two rooms and endure a dietary and living style that is most rudimentary. Additionally, it should be noted that N18,000 is allegedly spent on the feeding of one prison inmate monthly, while the estimate here is merely N20,000 for the feeding of a family of 6 per month. 4 An examination of the cost of living since the enactment of the National Minimum Wage Act 2000 shows clearly that the cost of living index has risen so much that the real value of the minimum wage set by the law has virtually been wiped out.Employing published data on the Consumer Price Index (CPI) from 2000 till July 2008, and taking into account developments in the overall economy and compensation adjustments since 2000, the minimum wage of workers in 2008 can be computed. This computation shows that in real terms, the minimum wage of workers would have to be adjusted upwards by a minimum factor of 4 in order to maintain the relative position of the least pai d worker in the national compensation structure established in 2000.Thus, the appropriate amount required in 2008 to maintain the real value of the National Minimum Wage set in 2000 would be (N11,213. 52 x 4=N44,856). Table 2: Estimated Monthly Cost of Meeting Basic Needs for a Representative Family * Item Accommodation Utilities a. Electricity b. Water c. Kerosene d. Communication Food Clothing Medical Education Cleaners, Soap and Detergents Entertainment, Recreation Communication Miscellaneous Total Cost (N) 6,000 1,000 500 4,000 2,000 20,000 4,000 5,000 6,000 1,300 and 1,000 1,500 N58,500Our Demands Based on the foregoing Congress demands: (i) A new National Minimum Wage of N52,200. This is the approximate average of the minimum wages when we take into consideration Minimum Annual Wage Levels in African Countries, the minimum cost of providing basic needs for the worker and his / her immediate family and the cost of living data. 5 (ii) that the Federal Government sets up a tripar tite committee as a matter of urgency to negotiate and agree on this, so that the National Minimum Wage Act 2000 can be amended to reflect the new amount.It is instructive to note that current negotiations on fixing a minimum wage for Ghana has recently reached preliminary agreement within the tripartite framework to adopt the basic needs approach in computing the minimum wage. (iii) an amendment to the Act to the effect that the National Minimum Wage law should apply to any establishment employing 20 or more workers, instead of the 50 workers currently stipulated by law. (iv) a general wage review; there is an urgent need to commence negotiations in both the public and private sectors so as to agree on new compensation packages. v) a wage review in the public sector based on the minimum wage computed above. Currently, the least salary in the Civil Service under the Consolidated Civil Service Salary Structure is N133,564 per annum or N11,130 per month. The new salary structure recom mended by the Congress is based on the least salary of N52,200 per month or N626,400 per annum, which is the proposed new national minimum wage. The new Consolidated Salary Structure would then be constructed so as to maintain the existing relativities in the salary structure.Sustainability and Affordability of NLC’s Demands Is the minimum wage proposed by the NLC reasonable, sustainable and affordable? Can the nation pay the new national minimum wage? The answer to both and related questions is an overwhelming YES! It is a resounding YES for the following reasons: (i) An increase in the purchasing power and effective demand of workers will increase the demand for goods and services and translate into growth for the economy. The morale, and therefore, productivity of workers will be greatly enhanced by the wage review. ii) Nigeria earns enough revenues, even with the downward slide in oil prices, to be able to pay. The problem in Nigeria is massive corruption by members of th e political and administrative elite and not lack of resources. To be sure, paying the new minimum wage will require that members of the political class cut their level of stealing of public funds. This will not be a bad thing; in fact, it will be good for the economy. (iii) If the economy can accommodate the huge sums spent on political office holders, it can accommodate a general upward review of wages and a national minimum wage as proposed.In any case, more resources should be devoted to the productive workers in any economy. Apart from political office holders, the profits declared in most areas of the private sector, continue to be massive. Even sectors which are contracting their operations continue to declare huge profits. Therefore, the public and private sectors of the economy are capable of paying higher wages. 6 Framework Proposed for the Negotiations The national minimum wage negotiations should be carried out within the tripartite framework, with workers, NECA and gove rnment represented.The emerging agreement from this negotiation should then be forwarded to the National Assembly as a Draft Amendment to the National Minimum Wage Act, 2000. At the conclusion of the minimum wage negotiation, the public service wage review negotiation should commence between labour and representatives of government, both Federal and States. Private sector negotiations should susequently take place within the existing sectoral framework of collective bargaining. On the general wages review, we wish to call on government to adopt the framework of collective bargaining, with representatives of all public sector employers, whetherFederal or State Governments, as employers, not as governments. Conclusion Congress makes these demands with great patriotism, sensitivity and responsibility. Congress holds that collective bargaining and negotiations with trade unions are sacrosanct and in consonance with the spirit of democracy. Congress calls on government to set up the nece ssary structures for the negotiations without further delay. To delay negotiations will further compound the living conditions of workers of Nigeria in the face of the alarming mass poverty already destroying their lives. February 2009 7