134% increase in minimum wage set to face hurdles in states

…As NLC threatens showdown over plans to remove wage from Exclusive list

After over six months of back-and-forth negotiations between the Federal Government and the organised Labour, President Bola Ahmed Tinubu last Thursday, finally resolved the impasse, by getting organised labour to accept N70,000 as new national minimum wage.

With inflation hitting an all-time high of about 34percent and food inflation hovering around 41percent, the N70,000, equivalent of USD46, monthly wage, may not go too far to ameliorate the economic challenges.

The wage increase targets about 5.3million direct beneficiaries of the N70,000 minimum wage and the consequential adjustments, it is expected that the 134percent increase will not do much to alleviate the sufferings of the Nigerian worker.

According to the National Bureau of Statistics (NBS), about 1.2 million Nigerians work with the Federal Government, 1.3 million work with the state government, while 1.8 million work in the private sector. All of these categories of workers are going to be direct beneficiaries of the wage increase and the consequential adjustments.

The President has however, assured that the Minimum Wage will now be reviewed every three years, to reflect developments in the economy.

The National Assembly has promised to ensure early passage of the new Minimum Wage Bill, by giving it accelerated hearing and passage, as soon as it is sent.

Read also: At N70,000, Nigeria’s minimum wage dwarfed by peers in top 10 African economies

Many of the states are however, insisting that they may not be able to pay the new wage, citing economic challenges, and are mounting pressures on the National Assembly to bring the wage under the Concurrent Legislative list.

Ahead of the Tuesday, July 23rd presentation of the bill to the National Assembly, the NLC has again threatened showdown over plans to remove section 34 from the Exclusive Legislative list to the concurrent list.

BDSunday gathered that following pressures from the Nigerian Governors Forum (NGF), the National Assembly and the judiciary have concluded plans to move the minimum wage from the Exclusive list to the Concurrent list.

The aim is to make it possible for the state government to set their own minimum wage.

But Joe Ajaero, president of the NLC, weekend, vowed to frustrate the move by mobilising workers to embark on strike, that move.

“The moment the House of Representatives and the Senate come up with such a law that will not benefit Nigerian workers, they will be their own drivers and gatemen, and there will be no movement for one month,” Ajaero said.

An informed source quoted the powers of the National Assembly to influence what eventually happens to the minimum wage.

He cited Part 1, subsection 34 of the 1999 Constitution which deals with the Exclusive Legislative List, as amended, which provides that “the National Assembly can, via legislation, prescribe a minimum wage for the federation or any part thereof.

“What it prescribes is binding on everyone, including the Federal, States and Local governments in Nigeria.”

In the course of the negotiations, members of the organised labour had walked out of the tripartite committee meeting on three different occasions, in an effort to press home a better wage provision for Nigerian workers.

The first was on May, 15th when the government proposed N48,000 as minimum wage, which labour described as ridiculous, labour again walked out of the meeting on the 28th and 31st of May, 2024.

The Federal Government had in the course of the negotiations proposed N48,000 which was later raised to N54,000 and later N57,000, then, N60,000, N62,000, before finally settling at N70,000.

It was not clear as at weekend, whether the promise by Nkeiruka Onyejeocha, minister of State, for Labour and Employment to ensure that the new minimum wage takes effect by 1st of May, 2024, still stands.

It is also yet to be established whether the Federal Government will allow the N35,000 wage award given by the President from September 2023 to continue until the new minimum wage bill is signed into law.

BDSunday gathered that even the Federal Government is in arrears on the wage award, as the last payment was for the month of February 2024.

The wage award was initially made to last for six months from September, 2023, to March, 2024.

Onyejeocha had made the promise on May 1st, during the Workers Day celebration, as part of efforts to woo the workers.

The Minister, while speaking on the delays in reaching agreement by the Tripartite Committee on Minimum Wage noted that “Our commitment is unwavering, despite the delays, I want to assure you that the new minimum um wage takes effect from 1st of May, 2024.”

Etim Okon, vice president of the Trade Union Congress (TUC), in a telephone interview with BDSunday, assured that the organised labour would press for the arrears during the public hearing of the bill, expected to get to the National Assembly next week.

“As you know, a statement from a Minister is a law and this is one of the issues that we will be pressing for from next week, during the public hearing, when the bill gets to the National Assembly,” he said.

Okon expressed happiness that the President has accepted to include in the new bill, a provision for national minimum wage review in every three years, as against the current five years.

“It is a good place to start from; there will certainly be consequential adjustments and let’s not forget that any small increase in worker’s income, produces great effects on the informal sector of the economy.

“Regular salary payments is a booster. The informal economy booms when workers get paid regularly. So, irrespective of the current projection of 5.3 million beneficiaries, our people should be well informed that workers drive the informal economy,” he said.

Sources close to the Presidency revealed that apart from the N70,000 approved by President Tinubu, he also promised to give labour 36 new 100-seater buses to ease public transportation challenges.

The buses will run on both compressed natural gas CNG and regular fuel.

“Everybody is affected by the new minimum wage. It is not just an issue for labour or workers alone, it will touch everyone.

“The President also stressed his strong commitment to ensuring that our refineries are all working so that fuel import will stop under this administration,” Okon said.

States: Labour’s new battle front

Abdulrahman Abdulrazaq, chairman of the Nigerian Governors’ Forum (NGF) and Kwara State governor, at one of the meetings he attended virtually, insisted that arriving at a new Minimum Wage would be difficult.

He blamed the situation on the removal of fuel subsidy and what he described as “meagre percentage increase in the Federation Account Allocation (FAAC) revenue, accruing to states.”

The Organised Private Sector (OPS), on the other hand, had recommended the sum of N60,000, which the NGF rejected, saying that they would not be able to pay.

As a panacea to ending the deadlock in the minimum wage negotiations, Southern Governors at their meeting on June 25, recommended that each state should be allowed to negotiate the new minimum wage with its workers.

The sector said it was already carrying several burdens of the fuel subsidy removal that had impacted greatly on the cost of operation, low patronage of its goods and services, high rate of inflation, all of which had resulted in closing down of over 300 firms.

The sector therefore, insisted that the only way it would accept anything higher than the N60,000 was to embark on downsizing which it said would affect the workers as many may be retrenched

The position of the OPS which was presented by Adewale-Smart Oyerinde, director-general of the Nigeria Employers’ Consultative Association (NECA), showed that several sectors will suffer if the Minimum wage is too high without consideration for sustainability.

The OPS, which proposed N60,000 monthly, stated that it was an increase of 100 percent on the existing national minimum wage.

They also expressed the fear that since about 84percent of jobs are being created by MSMEs, it may be impossible for them to align with anything above N60,000.00

They noted that already, government policies were hurting the operations of MSMEs through multiple and high taxes, hikes in electricity tariffs, high customs duties, among others, and recommended that any MSMEs that employ between 1 and 50 employees should be exempted from paying the new minimum wage.

They therefore, pleaded with the tripartite committee to make a recommendation to the FG to review some of its policies on high & multiple taxes, hikes in electricity tariffs, high custom duties, etc, currently being faced by the OPS, as these would foster a conducive business environment.

But Ajaero, the NLC president, in his reaction, declared that the ability to pay has always been the point of blackmail for the organised labour.

“As far as we are concerned, they did not benchmark the parameters to guide the minimum wage adjustments and as such, they didn’t have proper justifications for their positions,” he said.

” As for the Governors, we are watching their actions. Even the N30,000 old minimum wage, not more than 23 out of the 36 States have been able to implement payment, after five years of its enactment”