By

slukman45@gmail.com

Another general strike is steering the nation, this time around as a result of demand for the implementation of N18,000 minimum wage. Issues of minimum wage are popular largely because, in some ways the benefits are far beyond the target beneficiaries. This is because of the consequential effect of wage adjustments for other categories of workers and citizens as a result of increasing the minimum wage.

First for other workers who are not in the minimum wage category, because of issues of maintaining existing relativity between wage groups which is informed by factors of experience, merit, hard work, etc. wages may have to increase across the salary table, especially if the quantum increase in the minimum wage is so much. Higher increases are bound to fundamentally ulter the salary table. However, if the adjustment to the minimum wage is small as not to affect the next level of worker to the minimum wage category, there will not be any need for adjustment to the wage table.

In the context of the Nigerian reality, we are dealing with adjustment of minimum wage from N5,500 to N18,000. Given empirical reality as it obtains in the federal civil service, we are dealing with a reality of an increase from the region of something around N10,000 to N18,000. In the states (with the exception of Lagos) and private sector organisations, we are dealing with basically increase from N5,500 to N18,000. Part of what needs to also be recognised is that the difference in earning between workers earning the minimum wage and the next level may just be N100, certainly not up to N500. Therefore increasing the minimum wage from the low level of N5,500 or relatively high level of about N10,000 to N18,000 would mean fundamental adjustment that would require adjustments to all components of the wage table.

The questions therefore may be asked, why do we have to increase wages by such a very high quantum? Why didn't the process of law making recognise this factor before the new minimum wage of N18,000 is passed? Now that the minimum wage is passed what is it that need to be done? Could it be that the best option before the nation is to go back to the National Assembly and seek a repeal of the new minimu wage?

Wages, like the general price level, are supposed to be dynamic. Ideally, they should adjust regularly based on price indices and levels of inflation. Negotiation power of unions and responsiveness of bipartite and tripartite machineries are supposed to facilitate wage adjustments including reviews and adjustments of minimum wage law. Unfortunately, given reality in Nigeria, bipartite and tripartite structures are almost extinct. The only thing they now regularly do is attending the Annual Conference of International Labour Organisation (ILO) in June every year. Outside that, they only meet when there is threat of strike.

As a result, issues of collective bargaining, grievance handling and management of welfare of workers are sacrificed. And since there is very little regulation taking place in the management of union activities, our unions are increasingly moving in the direction of oligarchy and union leaders behaving more like aristocrats instead of being democrats with almost the danger of the only surviving democratic value being periodic elections which often result in high turnover of union leadership.

As it is, we today have some unions that hardly negotiate wages and many union leaders that don't have skills of negotiation. Consequently, wages never get reviewed unless there is general wage adjustment, which is the opportunity the new minimum wage throws up. If checked, it is very likely that even in the federal civil service, wages have not been adjusted since 2003 when the 12.5% salary increase was effected. In many states and other private sector organisations, they may not have been increased since 2000 when the N5,500 minimum wage was legislated. In contrast, check how many times the salaries of our public office holders and other Chief Executives have increased. Besides also check the change in general price levels and the rising inflation rates. More fundamentally, also check revenue records by both public and private institutions. At least, it is on record that cost of a barrel of oil in the international market was about $9 in 2000. Today, it is more than $100.

Empirically therefore there are very strong reasons why wages, especially minimum wage should increase. And if the increase is to address reality and not mere symbolism, it has to be fundamental and that is the main reason why Nigerian workers won the 2010 minimum wage award of N18,000. It was not a mistake or an act of benevolence. It was the logical response to an unavoidable reality. The Minimum Wage Act 2010 therefore wasn't a mistake and the question of going back to the National Assembly to institute a review process will only worsen the problem.

This much said, it is important that a distinction is made between the process of passing the minimum wage law and responding to the consequence of having to deal with matters arising from the implementation of the law. Unfortunately, there is a temptation to resort to quick fix strategies. The consequence of responding to matters arising from the passage of the new minimum requires that all wage tables are adjusted. Instead of instituting a framework to effectively negotiate adjustment of wage tables in all sectors, excuses are being formulated.

This is the crux of the matter on the dispute around the implementation of the new minimum wage of N18,000. The process of passage of the minimum wage law couldn't have resolve matters of implementation, especially issues of adjustment to the wage table. Matters related to adjustments of wage tables couldn't be automatic and are outside the scope of minimum wage law but as a result of the consequence of a large quantum adjustment of the minimum wage to N18,000, they have to be dealt with. They are matters that required the capacity to apply distributive formula to the salary table.

Having therefore passed the minimum wage, the next logical issue to deal with is what is being distributed? Determining the amount to be distributed is contingent on revenue and affordability. However, this is not in anyway to suggest absence of the resources or lack of affordability by any level especially in the public sector. What is required is for each level of government to be able to work out how much it is willing to afford. This may be a function of negotiation based on revenue reality and priorities of governments.To the extent that implementation of the minimum wage require adjustment of the salary table based on the factors outlined above, it is a technical function which need to be negotiated based on principles of affordability, while at the same time guaranteeing the new minimum wage.

Unfortunately, this is the component that is being mismanaged both by government and labour. It is being mismanaged because of excessive politicization of the issue and since revenue drive of government is no longer a function of work input but guaranteed by oil revenue, rational considerations are being compromised.To resolve issues related to the implementation of the minimum wage and most especially working out the framework that would ensure that payment of the N18,000 minimum wage is done within the resource limit of the government, it has now become very urgent for all levels of government to work out how much they can afford as salary increase i. e. the new wage envelop based on which a technical negotiation team comprising both government side and labour should be tasked to work out the distribution formula with N18,000 being the minimum as given by the law.

This is not a new approach. In 2003, arising from the challenge of increasing salaries by 12.5% in the public sector, what the Obasanjo administration then did was to constitute a negotiating team and tasked the negotiation team with the responsibility of working out a distribution formula based on additional expenditure commitment of N9 billion and subject to those at the bottom receiving 12.5% salary increase. That panel was chaired by Chief Ufot Ekaete and at the end of the negotiation, those at the top (level 17) ended up with just 4%.In order to have the right attitude for a technical negotiation therefore, there is the need for government to take measures to restore public confidence on its willingness to pay the minimum wage. Related to this is the issue of management of interests. In the process of management of these interests, government should resist the temptation of reckless debate around withdrawal of subsidy or deregulation and review of revenue sharing formula. Valid as they may appear, they are irrelevant to the implementation of the new minimum wage. Government, at whatever level can not appear to be giving conditions before a law is respected.

Specifically, issues of subsidy, deregulation and review of revenue allocation formula are matters that would have made very good sense prior to the passage of the law. In some ways, one is tempted to ask the question, what really happened during the process leading to the passage of the minimum wage Act? Was it that state governments didn't give the matter the priority it deserves? Or, was it that they were overwhelm by reality? It is far more likely that they were overwhelmed by reality especially given that the process of the passage took place during electioneering period.

One important issue that is being completely mismanaged is the potential to use the process leading to implementation of the new minimum wage to negotiate new forms of commitment from Nigerian workers through their unions. New forms of commitment based on the need to develop new work place culture and orientation that would ensure high productivity. It is being mismanaged largely on account of resistance by governments to pay the new minimum wage. This should not be so.

Finally, it is possible to resolve all matters related to implementation of the new minimum wage within a very short time. However, what is needed to avert the July 20 strike is clear demonstration of commitment through instituting a process that would define a new wage envelop and distribution formula based on a guarantee of the N18,000 minimum wage. Once this is done, the conditions for strike are removed and they can be achieved by the June 20 deadline.