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Nigeria: Minimum wage, Maximum wedge
Vanguard
Ikeddy Isiguzo

July 23, 2011
View the Original Article


EMOTIONS were bound to be high on the minimum wage. What most did not foresee was the subterfuge that politicians will bring into it. They gave workers minimum wage with maximum wedge to ensure it never works.

After shouting themselves hoarse about their inability to pay, they resorted to many imponderables. Imagine linking payment of the minimum wage to increase in the inflammable price of petroleum products. When that was not selling, they reminded Nigerians about the disproportionate revenue formula.

The workers have the minimum wage, they have to embark on maximum war to earn it. The politicians are ensuring this. When the Hon Justice S M A Belgore panel that worked on the new wage called for positions from the States over labour’s demand of N52,000, some of the proposals were Bauchi (N16,585.50), FCT (N25,000), Kwara (N30,000), Imo (N30,000), Zamfara (N15,000), Jigawa (N20,800), Abia (N46,700) Plateau (N10,000), Kebbi (N30,000), Anambra (N25,000), Akwa Ibom (N13,333.12), and Kano (N11,022.17).

Fears about violating workers’ rights are not new. A meeting of International Labour Organisation experts, in 1967, noted three basic contents of the minimum wage as: (a) The minimum wage is the wage considered sufficient to satisfy the vital necessities of food, clothing, housing, education and recreation of the worker, taking into account the economic and cultural development of each country ; (b) The minimum wage represents the lowest level of remuneration permitted, in law or fact, whatever the method of to take it home) remuneration or the qualification of the worker; (c) The minimum wage is the wage which in each country has the force of law and which is enforceable under threat of penal or other appropriate sanctions.

It is doubtful if N18, 000 (which can buy two bags of rice, without leaving a fare to take it home) would meet these conditions. More troubling is that with steep prices of food, housing , portable water, electricity, education, transportation, and a country that is low on infrastructure, N18, 000 disappears before it is paid. These concerns were also the focus of ILO’s Global Wage Report (2008/9). ILO proffered some solutions, among them more regular adjustments of minimum wages.

“Minimum wages should be adjusted regularly to maintain the purchasing power of affected workers in the face of price increases. The welfare of poor workers and households critically depends on both their wages and the prices they face. The adjustment of the nominal minimum wage in the context of increasing prices is thus as important as the setting of the initial rate for a minimum wage. In the current context of sharply increasing food and oil prices, and high inflation forecasts for 2008 and 2009, swift adjustment in minimum wages is all the more important,” the ILO report stated.

The average rate of minimum wage adjustment in Nigeria is a decade. After the Udorji awards in 1974, President Shehu Shagari signed wage law in 1981. Other laws followed in 1991, 2000, and 2011.

How does annual minimum wage in some African countries compare with Nigeria? Data from Wikipedia – Algeria ($4,277), Angola ($1,844), Benin Republic ($1,553), Botswana ($2,963), Burkina Faso ($1,736), Cameroon ($1,382), Cape Verde ($2,047), Chad (1,671), Comoros ($1,476), Congo ($2,225), Cote d’Ivoire ($1,443), Gambia ($1,610), Gabon ($3,892), Guinea Bissau ($993), Kenya ($830), Libya ($1,785, 2006), Mali ($1,284), Mauritania ($2,021), Mauritius ($4,100), Morocco ($2,696), Niger ($1,367), Senegal ($1,638), Seychelles ($5,276), (South Africa $2,471), Tanzania ($1,593), Togo ($1,283), Tunisia ($3,543).

Figures from Wikipedia may be unreliable since it reported Nigerian workers as earning $1,543 annually since November 2010. The calculation added the 13th month, the discretional end of year bonus and law was signed until June 2011.

Startling revelations from the Wikipedia list are Benin Republic, Burkina Faso, Chad, Mauritania, and Senegal, which pay higher minimum wages than Nigeria.

The first minimum wage law was enacted in New Zealand in 1897. With its long history, The United Kingdom made its law in 1999. A federal minimum wage law, the Fair Labour Standards Act, was first set in the USA in 1938. Many States, in the USA, have departed from the federal minimum wage. Washington’s minimum wage is highest, advancing to $8.67, January 1, 2011. Oregon’s minimum wage is $8.50; Connecticut, District of Columbia, Illinois, and Nevada are $8.25; Vermont is $8.15. These statistics from the Bureau of Labour and Bureau of Census are hourly figures.

Wages, the 1938 USA law said, must ensure a “minimum standard of living necessary for health, efficiency, and general well-being, without substantially curtailing employment.” The law in Nigeria is lenient on all these counts.

On 21 June 1945, after failed representations to government for salary increases, clerical and non-clerical workers in the Nigeria civil service, called a general strike of all government departments. The non-clerical, unskilled workers wanted a minimum wage of two shillings. The struggle has continued since then.

Arguments against a legislated minimum wage are fierce and provoking. “Forbidding employers to pay less than a legal minimum is equivalent to forbidding workers to sell their labour for less than the minimum wage,” economist George Stigler wrote in a 1946 treatise. “The legal restriction that employers cannot pay less than a legislated wage is equivalent to the legal restriction that workers cannot work at all in the protected sector unless they can find employers willing to hire them at that wage.”

Governments shouldbrace up for more wage demands. As Chris Azubogu, a member of the House Representative said even at N100, 000, inflation would overtake the minimum wage. “The issue is not about minimum wage but what is important is to make the Naira have value, and that is where Federal Government should focus,” he said.

The economy needs to be fixed to make the minimum wage meaningful, assuming politicians will wither the wedge.