Rising cost of living puts workers under pressure

Nigerian workers are not smiling on Workers Day as their wages remain stagnant and in some cases decline in the face of rising cost of living. However, the lean resources of both the state and federal governments means their desire for a higher minimum wage will not be met soon.

Even as the Senate President, Bukola Saraki described workers as the “lifeblood of the nation” in a message to mark workers day, he offered nothing in terms of legislation to back a higher minimum wage in the face of rising cost of living.

“As a result of globalisation, the Nigerian workforce is no longer competing with itself, we are now competing with our counterparts from both developing and developed nations. With this in mind, it is necessary that all employers — those in the public and private sectors — work to continuously invest in the development of their employees.

“On our part, the Nigerian Senate will continue to partner with Nigerian workers to enact legislation that will guarantee that they get their dues at the appropriate time, that their safety and well-being in the workplace are reassured. All these are necessary because when our workers are well taken care of, our businesses thrive, our economy grows, and our nation continues to succeed,” the senate president said.

But while Nigerian workers may want to compete globally skill wise, they are faced with the reality that their wages have remained largely stagnant in the last one year, even as the rate of inflation has increased from 15.58 percent in May of 2016 to 17.26 percent in March; the last time the inflation figure was released. While the overall inflation index has been declining, food inflation, which captures the increase in food prices, has been on a consistent rise since last year, from an average of 14.86 percent in May of 2016 to a March end close of 18.44 percent.

But signs that workers are under significant pressure are seen in the items that are seeing significant increase in prices. These include; housing, water, electricity, gas and  fuel, education, food and alcoholic beverages, and footwear.

Also witnessing significant increase in prices are bread, cereals, milk, meat, potatoes and yam tubers as well as cheese and eggs, putting further pressure on family incomes.

Instead of increasing salaries, many companies in  the private and public sectors have actually been forced to downsize their workforce as the economic conditions under which they operate deteriorate.

‘‘It has been very challenging for my family and I. My salary is still on the same level and every time I go to the market, I’m confronted with higher prices. The challenge is more on food because one must feed on a daily basis. These days, I ask my children if they have eaten and not if they have had enough to eat because I know they will say they have not and that would warrant me going the extra mile.

‘‘I’m even thinking of moving my children to another school because the school has informed me that they would be increasing the school fees next term,’’ said a government worker who spoke on condition of anonymity.

‘‘When you are having a shortfall in your salary and the prices of every item keeps going up, the wise thing to do is to cut your consumption and that is the strategy I have adopted.

‘‘Before now, we used to buy half bag of rice but we now buy in much smaller paint plastic measures. For other items, we go for cheaper substitutes. To survive this turbulent times, my wife had to start making hats in addition to her job,’’ said Felix Oloyede, a Lagos resident.

Ihuoma Amadi, a mother of five in Lagos said, ‘‘it was tough but it just got tougher because my employers sacked some staff five weeks ago and slashed the salaries of those who survived the retrenchment exercise. It is devastating but I’m dealing with it one day at a time.’’

As at yesterday (Sunday), a basket of fresh tomatoes was sold for between N14, 000 and N14, 500, as against N4, 000 in March. A 50kg bag of rodo pepper increased to N21, 000 from N15, 000, within the same period.

Furthermore, the price of a 50kg bag of Oloyin beans rose from N16, 000 to N18, 000, 25 litres of vegetable oil rose from N13, 000 to N13, 500, while 25 litres of palm oil rose from N13, 500 to N14, 000 within the same period.

A carton of Titus iced fish which previously sold for N18, 500 is now N19, 400, and a bag of onions is now sold for between N17,000 and N17,500 instead of N12, 000, within the same period.

The NBS unemployment data for the third quarter of 2016 released in December disclosed that 1.66 million Nigerians lost their jobs between the third quarter of 2015 and the third quarter of 2016 raising the unemployment rate to 13.9 percent from 13.3 percent in the second quarter of 2016.

Unemployment figures have consistently risen since the first quarter of 2014 showing that more Nigerians are being thrown into an already saturated labour market.

The NBS report also puts the number of underemployed Nigerians, that is Nigerians doing casual jobs, or not engaged in full time employment at 15.9 million, while another 27.9 million Nigerians of workable age (15 to 64 years) are not even looking for jobs.

Even for those working, things are increasingly getting tough. Secretary-General of Association of Senior Civil Servants of Nigeria, ASCSN, Bashir Alade Lawal, recently disclosed in a media report that up to 12 different states are still owing workers arrears of salaries, despite evidence that the country’s 36 states have received different forms of cash bailouts from the Federal Government totalling N1.75 trillion between 2015 and 2016.

States are still struggling to pay salaries despite the fact that the current N18, 000 minimum wage can hardly buy a bag of rice. The NLC and Trade Union Congress of Nigeria (TUC) in April 2016 jointly proposed a new minimum wage of N56, 000 to the Federal Government. The Federal Government has however been reluctant in engaging in negotiations over the proposal, especially in the face of very lean resources at both the states and federal levels.

Currently, the Federal Government spends an average of 80 percent of its budget on recurrent expenditure. The total revenues of the Federal Government are no longer enough to support recurrent expenditure, which includes the payment of salaries and wages and has had to borrow to sustain recurrent expenditure.

This means any further increase in wage bills, which takes up at least 70 percent of recurrent expenditure, could leave the Federal Government in an even more difficult financial situation.

Also at the state level, at least 33 states cannot meet payment of their recurrent cost with the total of money they get from the Federation Account and their internally generated revenues, which means without the recent bailouts from the Federal Government, many of these states would still be struggling to pay salaries.

Many public sector analysts believe with the difficult situation faced by many states, it would be suicidal to consider a wage increase now, in form a higher minimum wage, despite the obvious reality that many workers current “take home pay” cannot really take them home.

Nigerians are facing the worst economic crises since 1991 as negative fallout from the collapse in oil prices is being worsened by policy choices.

Oil accounts for two-thirds of government revenue and about 90 percent of its foreign currency earnings.

Economic growth in 2015 of 2.8 percent was the lowest since the return of democracy in 1999 as capital controls and the hard dollar peg imposed by President Muhammadu Buhari deterred foreign investors and led to job losses in the manufacturing and services sectors of the economy.

In 2016 the economy contracted by 1.5 percent, the first negative growth rate since 1991.

The rigid naira foreign exchange rate imposed by  government has also failed to slow inflation which at 17.2 percent has essentially doubled since early 2016.

Nigeria’s policy choices contrast with those of regional peers like Kenya, South Africa and Egypt.

The Central Bank of Egypt has allowed for the depreciation of the pound and adopted a flexible exchange rate regime.

The Egyptian pound is now the cheapest of all emerging-market and African currencies after it scrapped controls in November, investment bank Renaissance Capital’s real effective exchange rate (REER) model shows.

Investors have poured into Egypt buying up cheap assets, while Nigerian stocks were the world’s worst performers in the past year in dollar terms, losing 35 percent, according to Bloomberg data.

Foreign investors were net sellers of Nigerian stocks in 2016 as total foreign transactions decreased by 49.51 percent to N517.55 billion at the end of 2016 from N1.025 trillion recorded at the end of 2015, according to data from the Nigerian bourse.

Nigeria’s unemployment rate has risen to 13.9 percent in the 3rd quarter of 2016 from 9.9 percent in Q3 2015, while the underemployment rate (those working but doing menial jobs not commensurate with their qualifications or those merely working for few hours) jumped to 19.1 percent in the period, according to data from the National Bureau of Statistics (NBS).

Youth unemployment is at a staggering 42.2 percent.

The Nigerian Stock market fell for two consecutive years 2016 (-6.2%) and 2015 (-17.4%). So far in 2017 stocks are down some 4 percent.

Meanwhile Nigerian equities have lost about N1 trillion in market capitalisation since mid-2015.

The International Monetary Fund (IMF) forecasts that the economy will expand by 0.8 percent this year, which is below population growth rate of about 3 percent implying negative per-capita income growth.

Average incomes in Nigeria fell by about 18 percent in 2015 to $2,550 per annum from over $3,000 in 2014, according to World Bank and IMF estimates.

The negative per-capita income growth is acting as a drag on the consumption, with attendant negative implications for the wider economy, according to analysts.

 

PATRICK ATUANYA & CHINWE AGBEZE