New National Minimum Living Wage (NMLW) for Beginners, by Comrade Issa Aremu

New National Minimum Living Wage (NMLW) for Beginners, by Comrade Issa Aremu

By Comrade Issa Aremu

National Minimum Living Wage (NMLW) rests on the imperative of National Minimum Productivity (NMP). Indeed Sustainable living wage rests on maximum sustainable productivity. I agree with Mr Adewale Oyerinde, the Director General of Nigeria Employers’ Consultative Association, (NECA), that the pursuit of decent work agenda through wage improvement must be linked to sustainable enterprises, growth and development of the economy. Undoubtedly labour productivity has marginally improved despite poor working conditions caused also by low pay, but total factor national productivity is in the negative in Nigeria.
Only a shared tripartite perspective of “Wages determination” will offer a meaningful negotiated outcome for organized labour, employers and governments alike. To this extent, minimum wage negotiation is NOT a zero sum process. On the contrary. No stakeholder gets what it wants, but all stakeholders get negotiated terms following collective bargaining, trade offs and compromises.
Two months ago, in line with his Renewed Hope agenda, President Bola Tinubu commendably inaugurated the most expansive and inclusive 37-member Tripartite Committee on National Minimum Wage. Officially launched on Tuesday 30th January, on his behalf by the Vice-President Kashim Shettima the committee chairman, is the former Head of Civil Service of the Federation, Bukar Aji. I agree with the Vice President that the historic inauguration is a reminder of Bola Ahmed Tinubu administration’s commitment to enhancing the well-being of Nigerian workers. He has since paid Federal employees 6-months presidential wage award following petrol subsidy removal. As a mark of labour- friendly Statesmanship, the President just like his predecessor, former President Muhammadu Buhari also urged state governments with enhanced Federal allocations to pay their respective employees wage award till negotiations on new minimum wage are concluded.

The President rightly encourages the committee made up state governors, NLC and TUC, NECA and Federal to meet the requirements of sincere dialogue and actively participate in collective bargaining with honesty and integrity. Members of the committee from the Federal Government, the members include Nkeiruka Onyejeocha, Hon. Minister of State, Labour and Employment (Representing Hon. Minister of Labour and Employment); Mr. Wale Edun; Minister of Finance & Coordinating Minister of the Economy; Alhaji Atiku Bagudu, Hon. Minister of Budget Economic Planning; Dr. (Mrs) Yemi Esan, Head of the Civil Service of the Federation; Dr. Nnamdi Maurice Mbaeri, Permanent Secretary, GSO. OSGF and Ekpo Nta, Esq, Chairman/CEO, NSIWC – Member/Secretary. Certainly the tripartite committee promises to further consolidate on the legacy of minimum wage negotiations in Nigeria. The committee chairman Bukar Aji assures of “extensive consultations with broad spectrum of stakeholders to be able to come out with a minimum wage that is fair, acceptable and implementable.” The Secretary to the Government of the Federation (SGF), Senator George Akume, had urged the chairman and members of the committee to approach the task with the spirit of commitment, collaboration, flexibility and patriotism.”

Which then further raises the significance of wage compensation linked with productivity for national economic recovery. Wages are among the major factors in the economic and social life of any economy. In many countries of Europe and America, the wages of manual clerical and other non-manual workers, workers total 60 per cent, or more of the whole national income. What proportion of national income goes to wages and salaries of workers in Nigeria?

Certainly less than 10 percent, which explains the existing mass income poverty and low purchasing power necessary for economic growth. In a market capitalist economy, workers and their families depend almost entirely on wages to provide themselves with food, clothing, housing and all the other necessities of life. From colonial times to date, virtually all labour disputes in the education, health, industrial and judiciary sectors are wage-and compensation related! Indeed Micheal Imoudu was so- named N01 Labour leader for audaciously leading the struggle for union formation for improved pay for railway workers during British colonial rule. Many labour disputes are avoidable and preventable if the current crisis of compensation is urgently overcome.

To the employers in the Industry and private sector in general, wages form a big part of employers’ costs of production. For the Governments also that double as employers of labour, wages assume some problematics. Governments are legitimately concerned with wage impact on the economy with respect to employment, prices and inflation.

Again the point cannot be overstated that only a shared tripartite perspective of “ Wages determination” will offer a meaningful negotiated outcomes for organized labour, employers and governments alike. National minimum wage payment is applicable only to those in formal employment (Organized labour). How many workers are in formal employment? It’s all about data.

According to the National Bureau of Statistics (NBS), the number of persons in the labour force (i.e. people within ages 15 -64, who are able and willing to work) was estimated to be 80,291,894. As many as 90 per cent of the total work force are in the informal sector not covered by national minimum wage Act. NBS Nigeria’s unemployment rate has increased to 5.0 per cent in the third quarter of 2023 from 4.2 per cent in the previous quarter. Despite the controversy trailing the new NBS methodology of unemployment rate based on adopted ILO’s methodology, 5 per cent youth unemployment rate totals some 5 millions idle youths .

Nigeria should strengthen labour market institutions like Micheal Imoudu National Institute for labour Studies (MINILS), National Productivity Centre ( NPC) and National Directorate of Employment to generate appropriate labour data to inform policies on wage compensation. Above all, it was time to reposition the Federal Ministry of Labour and Employment through adequate funding for the implementation and monitoring of wage administration.

On November 14 to 15, 2022 at NAF Conference Centre, Abuja, Nigeria, Michael Imoudu National Institute for Labour Studies (MINILS) in collaboration with the National Salaries, Incomes, and Wages Commission (NSIWC) and Friedrich Ebert Stiftung (FES), Nigeria organized a 2-day national policy forum on “Compensation Management in Nigeria: Resolving Dilemmas, Reinforcing Milestones”. Some of the resolutions of the policy dialogue remain valid today: that Wages and salaries should be seen as macroeconomic targets like GDP that play important role in household consumption, economic growth and national development and poverty eradication; that While money wages have increased over the years, real wages have virtually collapsed.

That despite the efforts of employers of labour in the private and public sectors, there is an urgent need for improvement in wages and salaries to enable workers cope with the rising level of inflation as well as ensuring sustainable enterprises through enhanced purchasing power. That given its enormous national wealth and abundant natural resources in Nigeria, the Nigerian government must develop a fair wage deal that will motivate the workforce and ensure sustainable enterprises. In November 2023, both MINILS and ICPC organized a policy dialogue on the linkage between living wage and corruption. The conclusion is that improved pay for public employees is an antidote against grafts in public service.

What does minimum wage mean for the pensioners? Life after work is more precarious than life at work, no thanks to low, delayed even no- payment of pension.

The Pension Act of 2004 rightly terminated the old moribund Public Service-operated hitherto unfunded Defined Benefits Scheme (DBS) characterized by inadequate and non- released annual budgets with attendant implications for pensioners in terms of delayed payments, pension arrears, subsequent pension diversions and pension deaths. 2004 Act compulsorily made both the employer and employee pay to Retirement Saving Accounts (RSA) managed by Pension Fund Administrator of employee choice. In line with the best global practice in which employer pays more than employee, 2014 Act amendment increased the contributory rates to 10 and 8 per cent for the employers and employees respectively.

PenCom’s managed Contributory Defined Contribution Scheme (DCS) has dramatically changed the pension narrative for the better and prompt payment of contributors. The question however is how much are pensioners paid? After decades of work, it is unacceptable that many pensioners earn less than National minimum wage which it’s also inadequate, 2024 NM wage negotiation must align minimum wage to minimum pension for decent life for pensioners.

Comrade Issa Aremu mni
Director General, Michael Imoudu National Institute for Labour Studies (MINILS) Ilorin