by Emeka Omeihe
Before this article is published, the federal government and organised labour may have reached consensus on a national minimum wage. But before then, it bears stating that the logjam over the appropriate national minimum wage which culminated in the just suspended nationwide industrial strike is a product of contradiction.
It is a dialectical situation thrown up by the policies of the federal government and reactions to them by organised labour. The initial demand for an outrageous minimum wage of N1million from the current N30,000 by organised labour and government’s rejection of it as unrealistic and unsustainable, further underscores the dynamics of this contradiction. What are the issues?
President Bola Tinubu had immediately after his swearing-in last year, announced the elimination of subsidy on petrol. The measure immediately saw the pump price of the product rising well above N550 per litre in some areas. Before then, the product sold below N200 per litre.
Fuel subsidy removal was quickly followed by the floating of the Naira in the foreign exchange market. This saw the local currency exchanging for about N1, 400 against the dollar in the parallel market. The exchange rate was about N450 against the US dollar before the floating of the local currency. The effects of these measures on hyperinflationary trend were quite spontaneous with the prices of essentials hitting the rooftops.
The centrality of petrol to daily businesses and economic activities made the impact of the policies heavily felt in all households. The government was to explain that the interventions were necessary to save the national economy from collapse even as it urged the citizens for patience as the eventual outcome will lead to public good.
The ensuing inflation brought untold hardship as the prices of essential commodities including food items went beyond the reach of the average citizen. But the salaries and wages of the working class remained the same despite federal government’s award of N35, 000 to be paid workers for a few months. The reality was that many state governments were unable to pay that sum to their workers. In the face of this, the average worker was left to lick the wounds inflicted on him by the excruciating economic circumstances that are logical outcomes of government’s policies.
Attempts by organised labour to get the government reverse these policies including poorly coordinated strike actions failed to achieve any meaningful result. Organised labour subsequently began to mount pressure on the government for a wage increase such that will enable workers cope with the rising cost of living.
Negotiations have been on for quite some time without any agreement. Expectations that the tripartite negotiation committee would have concluded their assignment well on time for the federal government to unveil the new national minimum wage during the last workers day, failed to materialise.
Feelers on the inconclusiveness of the negotiations emerged when the President of the Trade Union Congress TUC, Festus Osifo announced that the new national minimum wage would not be announced on May Day. He had also said the only way that announcement could be possible was if the government accepted the N615, 000 demand presented to it by organised labour.
The implication was that organised labour had come down from its initial minimum wage demand to the new figure. But it was still on the high side. It seemed inconceivable how the government could accede to such a humongous amount given the parlous state of the national economy.
Osifo got the reading right. No new national minimum wage was pronounced on the May Day. But President Tinubu, apparently dissatisfied with the inconclusiveness of the negotiations by the tripartite committee, promised workers better working and living conditions buoyed by fair wage.
“This shall be resolved soon and I assure you that your days of worrying are over. Indeed the government is open to the committee’s suggestion of not just a minimum wage but a living wage”, he assured workers on May Day.
Even with the assurances from the president, negotiations failed to resume until organised labour went on industrial action last week paralysing activities with heavy losses to the national economy. Negotiations resumed following the suspension of the strike action for five days. Organised labour returned to the negotiation table with a minimum wage demand of N494,000. The government considers this still unrealistic and unsustainable. The president’s task to the Minister of Finance, Wale Edun to furnish him with the cost implications of the new minimum wage has been complied with amidst speculations.
For now, it remains a matter of conjecture what the final outcome of the negotiations will be. But one thing that seems clear is that with the intervention of the president, some consensus will soon be reached irrespective of whether it properly aligns with the inflationary trend triggered off by government policies.
Yes, N494,000 and the higher figures earlier demanded as minimum wage are unrealistic and unsustainable. The government and the private sector cannot possibly afford to pay such without dire consequences. But as unrealistic and unsustainable as the figure appear, they illustrate most poignantly the contradiction in the inability of the government to factor in the material conditions of our people as they went about floating inflation influencing policies.
It was obvious from all economic and social indices that the economy was not strong enough to absorb the dislocations bound to arise from those liberalization policies. Not only is the populace contending with low per capita income, the poverty rate is so high that the policies will end up reducing the people to the poorest of the poor. Incremental and guarded responses would have made better economic sense.
Organised labour seeks high minimum wage to enable workers cope with the hyperinflation unleashed by these policy measures. They have a point. But high minimum wage could also turn out counterproductive. It has the prospects of spiralling another round of inflation that could bring the economy on its knees.
The contradiction arose first, from the hyperinflationary trend unleashed by the removal of fuel subsidy and the floating of the national currency. To cope with escalating prices of general goods and services, labour mounted pressure on the government to grant workers high salaries and allowances.
If the government accedes to the high wage demand, it could in turn unleash another round of inflation with consequences more devastating than what we currently experience. That is the uncanny dialectics at play.
Even as workers deserve a better/living wage, extreme caution should be exercised to ensure another round of inflation is not about to be triggered off by whatever is finally agreed as the new national minimum wage. It is for this reason that suggestions have been made that it would have made better sense for organised labour to demand for a reduction in the price of petrol and some form of control on the value of the Naira in the foreign exchange market.
Such measures will bring down inflation, shore up real income. They also promise more beneficial to a greater majority of the citizenry than wage increases that target only those in gainful employment.
Organised labour also embarked on the suspended strike to press home their demand for the reduction of the cost of electricity following government’s elimination of subsidy for categories of consumers in that sector. The government had a few months back, raised the unit price of electricity for categories of consumers by over 250 per cent.
Apart from this figure being very prohibitive and unaffordable, the lot of consumers is compounded by the unavailability of pre-paid meters. Households without pre-paid metres in the so-called Band A areas are now made to pay estimated bills of N185,000 per month. This is as unrealistic as it is prohibitive. Matters are compounded by the inability of the Discos to make pre-paid metres available to customer willing to pay for them.
As the government considers a minimum wage that will not jolt the system further, it has to be more circumspect rolling out policies that will further erode the purchasing power of the ordinary people. The elimination of subsidy on electricity is one of such policies that has to be tinkered with. Else, it will make nonsense of whatever is finally approved as the national minimum wage with no end to the cycle of inflation already in active motion.(nation)
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