After several hours of deliberation yesterday, the federal government and organised labour could not reach an amicable point on the new national minimum wage.
While the federal government’s representatives increased their offer from the earlier N60,000 to N62,000, organised labour shifted from the N494,000 demand to N250,000.
The tripartite committee set up to harmonise decisions to come up with an agreed figure said that having critically examined the national minimum wage using all necessary parameters, and having applied the social, economic and political considerations as well as relevant ILO conventions and international best practices, it agreed that there is need for an upward review of the present national minimum wage; as the advantages outweigh the disadvantages.
In view of that, the committee urged President Bola Tinubu to note that it adopted the motion proposing N62,000 per month as new national minimum wage, having considered all other factors; and that organised labour insisted on N250,000 per month.
Therefore, it recommended N62,000 per month as agreed by the government and the Organised Private Sector (OPS) with policy incentives and other conditions made by states and the OPS and N250,000.00 per month as offered by organised labour as the new national minimum wage for consideration.
Addressing journalists after the tripartite committee meeting, Governor Hope Uzodinma of Imo State said the committee would forward the recommendation to President Bola Tinubu for the next line of action.
President of Trade Union Congress of (TUC), Comrade Festus Osifo, insisted on wages that reflect economic realities and the cost of living.
The new development in negotiations began when President Bola Tinubu earlier in the week directed the Minister of Finance and coordinating Minister of the Economy, Wale Edun, to come up with a new minimum wage and its cost implications, the template of which was presented before the labour leaders at the meeting yesterday.
Negotiations for the 2024 national minimum wage began with labour maintaining a strong stance on a new workers’ wage that would reflect the current rising cost of living.
From the onset, the federal government proposed a minimum wage of N48,000 against labour’s demand of N615,000 and then N54,000 against N497,000 before it finally shifted ground to N60,000 but all fell short of labour’s demand.
Before the strike on Monday, the Nigeria Labour Congress (NLC) and the Trade Union Congress of Nigeria (TUC) had been adamant about a minimum wage demand they reduced to N494,000 while citing the current economic situation and the needs of the average Nigerian family.
At one point, despite the unions’ strong stance, the labour leaders walked out of the negotiation as all the government’s proposals did not align with their expectations.
The NGF had earlier issued a public disclaimer in reaction to the government’s offer of N60,000 which it described as “unsustainable.”
The major argument by the governors, according to insiders, is that the states would literally be left with nothing to work with if they pay a large chunk of their resources as wages to workers.
For example, a governor from the South who is a member of the opposition lamented how he would take such huge amounts to pay less than 200,000 civil servants in the state, which does not constitute more than 5 percent of the population.
The Nigeria Governors’ Forum (NGF) warned that implementing the proposed N60,000 monthly minimum wage would push many states into financial ruin, crippling their ability to fund critical development projects and basic services.
According to a press statement released yesterday by the forum’s acting director of media and public affairs, Hajiya Halimah Salihu Ahmed, governors across the country sympathise with labour unions pushing for higher wages.
However, the statement cautioned that the N60,000 figure was simply unsustainable given the financial realities facing most states.
“The minimum wage negotiations also involve consequential adjustments across all cadres, including pensioners. Any agreement to be signed should be sustainable and realistic,” it stated.
According to the NGF, paying N60,000 minimum wage would exhaust the entire federal allocation received by many states just on personnel costs, leaving zero funds for investments in infrastructure, healthcare, education and other priorities.
“In fact, a few states will end up borrowing to pay workers every month. We do not think this will be in the collective interest of the country, including workers,” the governors added.
They urged labour leaders to carefully consider the socio-economic variables at play and settle for an agreement that is fair and affordable for all parties involved, including segments of society that rely on public resources. The anger is however more among players in the organised private sector.
“The federal government has literally shaved our heads in our absence. Though we had nominal representations, they were not allowed to come back to us for proper consultation,” said a manufacturer in Lagos who craved anonymity.
Though governors, local governments and the organised private sector are against the N60,000, a member of the federal government’s negotiation team said the government was ready to keep its promise of a figure higher than N60,000.
“Actually, the federal government’s position is that we can pay as much as N65,000, being that the president believes in quick and amicable solution,” another source said.
When contacted, the minister of information reiterated the government’s position of keeping the promise of the president to pay above N60,000 as minimum wage subject to its ability to sustain the final minimum wage the tripartite committee finally comes up with.
Organised labour is pushing its demand for a comprehensive reassessment and adjustment of the national minimum wage in accordance with the National Minimum Wage Act of 2019, which established the legal framework for periodic reviews of the minimum wage every five years. It would be recalled that the last revision was implemented in 2019, setting the minimum wage at N30,000 against the previous N18,000 set in 2011.
On January 30, 2024, President Bola Tinubu appointed a 37-member panel to recommend a new national minimum wage for Nigeria. The panel, which includes members from the federal and state governments, private sector, and organised labour, is led by Vice President Kashim Shettima. Representing various geographical regions, the panel includes governors such as Umar Bago (Niger), Bala Mohammed (Bauchi), Dikko Radda (Katsina), Charles Soludo (Anambra), Ademola Adeleke (Osun), and Otu Bassey (Cross River), tasked with deliberating and proposing a revised national minimum wage.
The past few years have been marked by fluctuations and challenges, as reflected in the annual GDP growth rates. In 2016, Nigeria recorded a recession marking the most severe economic downturn since 1987. A year after, till 2019, the country experienced modest economic growth, but things again went down in 2020 due to the COVID-19 pandemic.
The government’s decision to remove fuel subsidies and implement a managed exchange rate float to achieve stability and resilience led to an increase in the prices of goods and services, hence a decline in purchasing power and increased poverty levels in the country.
Inflation increased from 22.4% per cent in May 2023 to 28.9% in December 2023, during which time the price of petrol increased from N198 per litre to N626 per litre within six months. This was followed by a considerable devaluation of the naira against the United States dollar, from N461 to one dollar to N1,493 to the dollar.
The long effects of these, despite budget amendments by state governments, palliative measures and adjusting capital expenditure appropriations to accommodate variations in critical infrastructure projects, led to an increase in nominal FAAC revenues, with net deductions increasing marginally from N1.39 trillion in the first half of the year to N1.52 trillion in the second half of 2023, meaning that the additional revenues had actually shrunk with the increase in monthly inflation.
State governments are, therefore, expressing concerns about their limitations in addressing the current situation. They say wage increases should align minimum wage adjustments with economic realities at the subnational level, thus prioritising the fiscal sustainability of the states. However, organised labour argues that the astronomical rise in the cost of living necessitates a commensurate increase in wages.
For instance, according to states’ FAAC net distribution obtained by our correspondent, 11 states are grossly incapacitated to pay the N60,000, while other states have varying levels of incapability.
According to data sourced from the Nigeria Governors’ Forum secretariat, the 11 states have recurrent expenditures that far outweigh their total revenue.
The affected states include; Abia, Ekiti, Gombe, Imo, Katsina, Kogi, Oyo, Plateau, Sokoto, Yobe and Zamfara States all have negative net revenue.
Zamfara State seems to have the highest deficit, accruing N75.8 billion in total revenue and recurrent expenditures of N103.2 billion, hence its negative net revenue of N27.3 billion.
Other states that don’t have capacity to pay the N60,000 minimum wage include; Abia, Ekiti, Gombe, Imo, Katsina, Kogi, Oyo, Plateau, Sokoto, Yobe.