“States should be allowed to pay based on their capability. If we are really claiming to be a federation, that is how it should be.”
Stories by Olakunle Olafioye
The Director General of the Lagos Chamber of Commerce and Industry, Muda Yusuf, has called on governments at all levels to show more commitment to the welfare of workers. He identified some of the factors militating against governments’ inability to live up to its billings on workers’ welfare in this interview.
The deliberation over the minimum wage has lingered for a very long time. Why is there always so much fuss on the issue of minimum wage in Nigeria?
The issue of minimum wage is a bigger issue for the public sector than the private sector because many private sector operators, even the SMEs are paying far above the minimum wage to their workers. But for the public sector, obviously N18, 000 is not a living wage at all. It is long overdue for a review.
So, I think the main issue is that the public sector is carrying a workforce that it doesn’t need. And it has been a problem both for the federal government and even worse in the case of state and local governments. The workforce is not a sustainable workforce. That is one major reason.
READ ALSO: Labour spoils for war
There is too much political expenditure on the government. Many politicians have chains of advisers running into hundreds in some states. So there is no sufficient prioritization in favour of paying the workers. Those are some of the factors I think are responsible for the delay. There is need to show more commitment to giving priority to workers’ welfare.
Looking at all available indexes, would you say the demand of the labour union is realistic?
The demand of about N60, 000 is just about $140 dollars in a month. What can that do anyway for a family man? You have a wife, you have may be two or three children. He has to pay house rent; he has to eat and may be he also has to pay school fees. Can that do anything these days? It is not unreasonable. The only thing is that whether the states can pay it given the workforce they have. The issue has to do more with unreasonable number of their workforce. And to deal with that, it is a very difficult political decision to take so that they are not accused of sacking workers. The reality is that many of these ministries can do with not more than half of the workforce they have. I think the government should have a very decent exit strategy or to get people to exit voluntarily because they need to prune down the workforce.
There is the argument that workers at the lower rung of the ladder are not always well protected when negotiating minimum wage as they are seen as the most vulnerable to the effect of inflation, which is the major fallout of rise in workers pay. What is your view on this?
If you check the entire public service, apart from those who are able to get money from some other illegitimate areas, the salaries of even the senior people there are nothing to write home about. Go and check them out. People on level 12 or even directors who have put in more than 15 or 20 years in service, how much is their salary. If you check those that are living comfortably among them, you will discover that it is not from their salaries. So, the general wage structure in the civil service is very poor. So it is not an issue of only those who are at the bottom of the ladder; it is something that is applied to everybody in the public service. That is why corruption is so pervasive, because people want to survive.
What is your take on the argument that states should be allowed to pay different minimum wages based on their capabilities?
States should be allowed to pay based on their capability. If we are really claiming to be a federation, that is how it should be. The centre cannot just be imposing minimum wage on the states. But having said that, the current N18, 000 minimum wage is unreasonable. No matter which states you are talking about.
Most employees in private sector already protected against inflation – Timothy Olawale, DG, NECA
As workers in Nigeria anxiously await the final recommendations on the new minimum wage, Director General of the Nigeria Employers’ Consultative Association (NECA) Timothy Olawale, said employees in the private sector are already protected against the likely fallouts of wage increase. He speaks more on the ongoing deliberations on the new minimum wage.
How would you assess the current wage demand by the labour?
It is a process and the process is for all stakeholders to build consensus that are connected to the world of work – government as regulator, employers and workers, to build consensus on what is ideal. Every one of us agreed that there is a need for a review but the quantum is the major issue. They have made a demand and every other party has its submission on what they feel is affordable and sustainable but we have not reached that point where we can say let’s put our submission to a conclusion.
With the possibility of cash push inflation, is there any other way of mitigating the effect of the rising cost of living without resorting to wage increase?
As employers, there are lots of things we’ve actually been doing before now. In the private sector we don’t wait for the review of the minimum wage before we improve on the standard of living of the worker. We negotiate every two years with the union and review workers’ salaries in the private sector. This also takes into consideration issues of cost of living, economic indexes and parameters. These are equally things that are being considered in this particular case now. What are those issues that should inform a review?
The cost of living like you have mentioned is very fundamental. Another important factor is the principle of affordability. Whatever we are going to arrive at must be affordable to all employers of labour. Then, we also have the issue of micro and small-scale enterprises that are vulnerable and are not as strong, with regards to capacity. So, the principle of affordability is key. There is also the issue of sustainability. It is not just for you to pay at the initial stage and fizzle out and not able to sustain it.
All these are being considered and they are going to shape whatever decision we come up with.
There is a concern that since we are approaching an election year, politicians might want to play to the gallery with the intention of currying peoples’ favour only to renege after the election. What is being done to guard against such a development?
I cannot confirm or deny this concern and I also cannot speak for the politicians. All I know is that as employers of labour in the private sector we are part of the discussion and our voice would be heard on what is convenient and acceptable and affordable to every sector irrespective of the position of the political elite.
What is your view on the issue of uniform minimum wage as practiced in Nigeria?
Minimum wage is not the same as the regular wage or salaries of workers across the board. It is just the least that is payable to the lowest cadre of workers in Nigeria, below which no employer must pay. It is not as if it applies to everybody. And what is the percentage of those that earn minimum wage, the percentage is not so significant. You are talking of those who are in the lower ranks. So when you bear that in mind you understand minimum wage is just about the lowest beneath which nobody must pay. You can pay higher but not below.
Cost-push inflation is one of the backlash effects of increase in minimum wage, with the workers at the lower rung of the ladder being the most vulnerable. What should be done to protect this category of workers?
The essence of this review is also to address the increase in the cost of living between 2011, when it was reviewed last and now. In other words, it’s a means of correcting that imbalance of that cost of living that must have affected the spending pattern of workers. So, if you are correcting, you must know that it could also trigger another problem and the problem is the same problem you are trying to correct. In the private sector what are we doing? Most employers in the private sector are already paying far above the minimum wage of N18,000. We don’t know what the new minimum wage will come to, but whatever it comes to, it is most likely that some employers in the private sector may have been paying more than that. And those that are not paying will make adjustments. So, I don’t see that actually affecting us much in the private sector. The public sector might be a different ball game. I might not be too competent to comment on what employers in the public sector will do to mitigate that problem.