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Wages advisory committee as smokescreen

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By Henry Boyo

PRESIDENT Muhammed Buhari inaugurated a Technical Advisory Committee for the implementation of National Minimum Wage, on Wednesday, January 9, 2019 in Abuja. The occasion offered Mr. President the opportunity to declare his commitment “to a review of the present N18,000 minimum wage;” PMB consequently, assured workers that “we at the federal level have made adequate provision for increase in the minimum wage, in our 2019 budget proposals, which we have submitted to the National Assembly;” notably, however, the budget submission came, barely a week before Parliament went on recess in December 2018!



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Although, 2019 budget may have provided for additional cost incurred in ‘moving up’ all personnel who currently earn below the new minimum wage, according to PMB, however, negotiations for salary review for all workers who already earn above the new minimum wage will begin, after the Wages Advisory Committee has submitted its recommendations. PMB has however, warned that implementation of the expected, considerable wage adjustments, for higher category of Public Servants, must not adversely “affect the appropriate, adopted targets for levels of Capital Expenditure, Public Debt, Inflation, Employment, etc, in Government’s Economic Recovery & Growth Plan (ERGP).”

The Minimum Wage Advisory Committee’s specific terms of reference, include, to develop, and advise government on how to successfully bring about a smooth implementation of ‘imminent’ wage increases and also identify new revenue sources, and areas of existing expenditure, from where some savings could be made, to fund wage increases, without adversely impacting the Nation’s development goals as captured in Government’s Economic Recovery & Growth Plan.

The Wages Committee will also propose a work plan with appropriate modalities for implementation of the salary increases; furthermore, other suggestions that will assist in the implementation of this and future wage increases, are also expected from PMB’s Wages Committee.

However, “given the urgency of this exercise,” the Minimum Wage Committee is expected to complete its deliberations and submit its report and recommendations, within one month from the date of its inauguration, on 9th January 2019; consequently, the Committee’s final report will be presented to PMB barely a week, before the General Elections commence on February 16, 2019.

Bismarck Rewane, a well known Economist and ‘brother’ of this columnist, has been appointed as Chairman of the Advisory, Minimum Wage Committee. Ben Akabueze, the current Budget Office Director General, will serve as Secretary to the Committee, which also includes, a representative of Nigeria’s Governors’ Forum, as well as, about 25 other nominees from both the public and private sectors.

Regrettably, the characteristic, traditional fire brigade approach to resolving critical national issues, is again amplified, with the process of adopting and implementing a National Minimum Wage schedule. Evidently, PMB’s Administration, recognizes that the minimum wage was constitutionally due for review in 2016, i.e. five years after the adoption of the subsisting N18,000 minimum wage in 2011.

Curiously, however, despite several reminders and several threats of a general strike by Organised Labour and the obviously parlous, inflation eroded wages of a pauperised working class, government, characteristically prevaricated, until, virtually the ‘last minute’ before taking remedial action. In retrospect, the N18,000 minimum wage was the equivalent of $112, with N151-165=$1 in 2011; conversely, N18,000, now has a purchasing value of barely $50, with today’s exchange rate of N360=$1.

Thus, although the proposed N30,000 may seem like almost 100% nominal increase on N18,000, nonetheless, in real terms, the proposed N30,000 is barely $83, i.e., still below the real purchasing value of the 2011 minimum wage of N18,000, and also below the International Poverty threshold of about $3/day!

Regrettably, Nigeria has since become the World’s Poverty Capital, according to a Washington based Economic think-tank, with reportedly, six Nigerians falling below the poverty line, every second! It is clearly ironical that this TOGA of deepening poverty is now worn by an acclaimed reformist and progressive Administration, which purportedly came to power to redeem Nigerians from economic bondage and an allegedly clueless Administration.

Although the Federal Government has agreed in principle to pay N30,000 minimum wage, there are however concerns, that less than 8 of the 36 states have expressed their willingness or capacity to pay N30,000/month, with additional pro-rata adjustments, for all workers, who already earn more than the proposed N30,000 minimum wage.

Instructively, however, since the issue of minimum wage is on the Exclusive Legislative list, the Federal administration cannot exclude those states with evidently weaker revenue generation base, from any legislation for upward review of the minimum wage. Consequently, although PMB has declared the readiness of his administration to enact a N30,000 minimum wage, his plan maybe ambushed in the National Assembly, by representatives from majority of states which have, already, protested the escalation of the minimum wage, beyond their respective capacities to pay. Thus, the question will ultimately arise, as to what will happen, if President Buhari’s Minimum Wage Bill fails to pass through the National Assembly, before or after the elections; in other words, will the Federal Government and other willing states proceed, thereafter to adopt the promoted new minimum wage, without legislative mandate? Arguably, with the present disposition of several state governors, the matter of an acceptable new National Minimum Wage is probably far from over!

Ultimately, the product of the almost 30-member Minimum Wage Advisory Committee’s deliberations, may only be limited in application to just the Federal Government and a handful of states. In fairness, however, it would be unreasonable to expect that PMB’s Wages Committee, could adequately evaluate the revenue opportunities and capacities of all 36 states and the Federal Government and also carefully identify, within 30 days new revenue sources, and selected areas of expenditure, from where some savings could be made, to fund ‘wage increases’ without adversely impacting Government’s declared ERGP developmental goals.

It is equally inexplicable that the Wages Advisory Committee was established barely a month before the General Elections, even when, the issue of a review of the minimum wage had been evidently imminent, as far back as 2015 when the old minimum wage, legally expired and Buhari’s administration took over.

Ultimately, however, if Federal and all State Governments, ‘magically’ succeed in adopting N30,000 minimum wage, the resultant vastly expanded money supply will drive double-digit inflation rates which will reverse any positive result from any wage increase! Furthermore, both Federal and State Governments may also be compelled to compound their already oppressive and possibly unsustainable debt burden to pay N30,000 minimum wage.

Ironically, however, quantum nominal salaries increases will invariably drive higher inflation rates and deepen poverty; however, a stronger Naira rate, of say N100=$1, will invariably translate the current N18,000 minimum wage to about $180, i.e. an income of almost $5/day, well above the poverty bench mark of $3/day. Instructively, a stronger Naira will remain elusive so long as the CBN continues to substantiate Naira allocation for dollar revenue and also auction Nigeria’s dollar earnings against Naira!

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