MINIMUM WAGE DEBACLE

It has become both a moral and legal truism that every worker is entitled to his/her wages, but the questions ultimately begging for answers are how much of the wages is a worker entitled to or put differently how much of the workers are entitled to wages or how much more should the workers earn in the face of harsh economic realities especially when juxtaposed with the cost of living in the country and the jumbo pay the politicians cum executive, legislator. judiciary earn, is the existing minimum wage realistic or who or what should determine the minimum wage in Nigeria? Wages according to the Labour Act means remuneration or earnings (however designated or calculated) capable of being expressed in terms of money and fixed by mutual agreement or by law which are payable by virtue of a contract by an employer to a worker for work done or to be done or for services rendered or to be rendered; it can also be defined simply as a sum of money paid to a worker in exchange for services, especially for work performed on an hourly, daily or weekly basis. In Nigeria the new minimum wage is N30,000 or about $83 . It is on record that San franisco which pays the highest salaries in the world pays about  $6,526 usd about 2million naira per month, in Ireland the minimum wage is about 9.80 euro per hour for adult workers. and if I may ask another question, will Nigeria ever pay something close to that? May be it will take another Martin Luther King to dream it.

However, there is a fortunate section of the Nigerian work force who are paid well at least better than their counterparts abroad, the Nigerian senators were recently revealed to be entitled to a monthly expenses of N13.5 million about $37000 in addition to their monthly salaries of about $2000. A senate spokes person is reported to have confirmed the figure but said the funds were for senators to run their offices and should not be counted as part of their salaries. It therefore means that a senator earns the new minimum wage every 10 mins, hmmm quite impressive for a public servant.

The collective agreement between the federal government and labour has led to the passing of a bill for an increase in the minimum wage of the organized private sector in Nigeria from N18,000.00 (eighteen thousand naira only) to N30,000 (thirty thousand naira only) and this increment has continued to generate a lot of reactions from different persons and groups, some even expressing very strong feelings of disapproval and posit that it may just be the biggest mistake, looking at the negative impact that they perceive this action may have on the economy in view of inflation, unemployment and other socioeconomic consequences, some other people feel it is the right step in the right direction, while some are only concerned about how the government can put in place a safety net which should invariably prevent unnecessary increases in prizes due to the minimum wage increase and some other persons are asking why they (non government and organized private sector workers) should not be covered by the minimum wage act. This only goes to show reasons why people are skeptical about the consequences and how they can mitigate its impact or even take advantage of it as the case may be.

The consequences of the wage increase remains to be seen, but one thing is certain which is that the divide between the haves and haves not will continue to widen and as this social divide continues to widen, social inequality, the declining purchasing power, the rising inflation rate, the rising unemployment rate, rising crime rate, the slow economic growth and the eventual cataclysmic imbroglio that may lead to a general economic nosedive. How much should a person really earn ideally and what does the labour law say about some of these issues. As an individual, I will try to take a neutral posture and try to proffer credible answers to these questions begging for answers. Sitting gallantly in my office I must confess that I cannot decipher whether or not these issues have any direct impact on my earnings being that I am only a private legal practitioner but obviously the prices of goods will essentially take its bit and can affect one negatively.  

Looking at what is obtainable in legal practice, there is unfortunately no provision for a minimum amount professionals like lawyers, accountants, doctors et al, should earn assuming one is already on an hourly, daily, weekly or monthly salary, but on the contrary this means there is no fixed amount a lawyer for instance should demand. Assuming but not conceding that there should be a minimum wage for lawyers will N30,000 per month be realistic especially for young lawyers who are attached to one principal or the other. Some have argued that there is no amount of money that will be adequate for a lawyer as salary because it will be difficult to determine how much a practicing lawyer should be paid. Unfortunately, it is only by a collective bargaining agreement or a governmental enactment that a minimum wage rate can be payable so lawyers are automatically exempted from this arrangement.

Although, We must also be mindful of the fact that there are other professional bodies who have formed labour unions and can press home their demands or cripple not just the entire industry but entire economy. I was confronted by a labourer who enlightened further of an existing minimum wage earned by labourers on a daily bases, I was even more surprised that I could not negotiate with this labourer because as I found out this defacto minimum wage for the daily pay for a cement mixer had come to stay. I do not wish to degrade or denigrate the sanctity of these individuals but at N1500 per day their wage will amount to about N45000 per month for 30 days and one begins to wonder how this minimum wage was arrived at. The method of collective bargaining suffers serious limitations because it only covers workers in a specific area or craft hence it cannot be reflective of the general reality of the living standards of the generality. The point is that most workers are not covered by the minimum wage laws in Nigeria.

However, the unemployment rate in Nigeria continues to rise at an alarming rate and this increase in minimum wage may put more pressure on the labour market leading to layoffs and retrenchment. As the government continues to threaten tax increase and downsizing. A study recently published in the American economic review provides new evidence that increases in the minimum wage reduce employment in the long run. Essentially, the argument is that an increase in labour may also affect the demand for labour. The authors of the new study- Paul Beaudry, David Green, Ben Sand- create a framework to account for the effect an increase in the supply of labour can have on the demand for labour in order to isolate the effect on wages on employment. They find that increase in wages have a negative effect on employment over 10-year intervals. In terms of magnitude they find that a 1% increase in wages leads to a 0.3% to 1% decrease in the employment rate depending on whether wages increase city wide or in only one industry. Therefore, it may not be correct to argue that increase in minimum wage across every sector will be entirely beneficial in this regard.  

As at 1^st may 2000 the national minimum wage in Nigeria was N5,500 only and in the space of nineteen years has now moved to N30000 which is about 500% increase. By virtue of the national minimum wage act, every employer is to pay the minimum wage but this conflict’s with the reality of things on ground because most employers in the private sector find it hard to make profit not to talk of paying salaries.

If we can profer solutions to the minimum wage debacle, I will suggest that the minimum wage increase needs to be based on particular criteria a fixed variable that one can easily monitor. It should not just be based on the whims and caprices of the labour union or that of the minister of labour or the government for that matter. I will humbly suggest a body such as a minimum wage technical group made up of representatives of all the unions be saddled with the responsibility to advice on the appropriate rate for the national minimum wage. Such advice should be done yearly so as to keep the government on their toes and not to have to be forced by series of industrial actions and counter actions before doing what they ought to have done. In all fairness the private sector needs to be carried along because the private sector is the major employer of labour. In most advanced countries like the United States, Canada and European countries the government provides social security to people with inadequate or no income. As the price of goods and services continues to increase it is pertinent for the government to begin to think in this direction so as to avoid the heavy losses incurred as a result of industrial strikes.