Bimbola Oyesola
The battle for a new national minimum wage in the country seems far from being won. Though Nigerian workers are anxiously waiting for the Senate to pass the bill, there appears to be more hurdles to cross besides the President signing it into law.
While the Organised Labour had fought vehemently to secure N30,000 monthly wage, it is also apprehensive that taxing it further may vitiate the victory won.
In 2011, when the current N18,000 was approved as Minimum Wage, workers in that income bracket were exempted from paying tax as the deduction would have further reduced the wage below N18,000.
Also comparing the contentious N30,000, which is about $83 at current exchange with the 11 dollar per hour minimum wage in America, shows that the least paid worker in America will earn in a day what a Nigerian worker is struggling to earn in a month.
In the same analysis, a worker in Indonesia earns $100 dollar as minimum wage. But unlike in Nigeria, where the social safety net is not working, in Indonesia, the worker salary is not expended on health, education, while, gas, transport are heavily subsidized and food is very cheap and affordable. The opposite is the case here.
Perhaps the reason why Organised Labour is calling for tax exemption on the proposed new wages in order not to put further pressure on it and thereby making the increase irrelevant.
The leadership of the Nigeria Labour Congress (NLC) at its just concluded NLC 12th Quadrennial Delegate Conference raised fresh concerns over the proposed national minimum wage, saying there was need for an amendment of the income tax laws to cushion the effect of devaluation that might hit the N30,000.
In a petition submitted by the National Union of Textile Garment and Tailoring Workers of Nigeria (NUTGTWN) at the plenary session of the conference in Abuja, which saw the re-election of Comrade Ayuba Wabba as President, the union noted that there was a “twin assault on the real income of Nigerian workers caused by unrestrained devaluation of naira and high rate of inflation.
General Secretary, NUTGTWN, Issa Aremu, said that it was important to put pressure on the Federal Inland Revenue Service (FIRS) to raise the tax bar in such a way that N30,000 minimum wage would fall below taxable income.
In the same vein, the labour leader made case for tax holidays for some categories of Nigerian workers.
He said: “Now that we have raised the minimum wage to N30,000, we must impress it on the FIRS to raise tax bar so that the new minimum wage will be protected.
“If you tax minimum wage of N30,000, we may as well go back to N25,000 or N27,000 by default.
Deputy Speaker of the House of Representatives, Yusuf Sulaiman Lasun, raised the point and I think Labour must push the agenda to protect the new minimum wage.
“The N30,000 monthly income is actually a compromised amount from N56,000 earlier proposed, so it must be protected. If the Federal Government can give 10-year tax holiday to companies, why not give the same to workers? Given the collapse of income, today, Nigerian workers deserve tax holidays.”
Aremu, a gubernatorial candidate of the Labour Party in Kwara state said, “workers are not asking for this because we consider our job as charitable, what workers have in their pocket is what will turn the economy around. That is what we will use to purchase goods in the market and pay rent.”
According to him, for economic recovery to gain traction, it is good for workers to have sustainable purchasing power or disposable income that is off the tax hook.”
Arguing in line with Aremu’s position, General Secretary of NLC, Peter Ozo-Eson, also expressed that the income tax law should be amended to protect workers’ purchasing power.
He reasoned that, “given that the N30,000 labour agreed as a compromised minimum wage is so low, ideally, it should not be taxed.
But I believe that the correct way to do it is to amend the income tax law in order to raise the exemption bar if N30,000 will fall within.
“The law should be amended to ensure that the minimum wage level is below the taxable income. Under the present law, if you earn N18,000 a month, your tax is zero. There is a tax table, but with N30,000, under the existing exemption guideline, there will be some little tax because it will be slightly above the exemption tax. What needs to be done is to have an adjustment to the schedule so that the exemption is placed above the minimum wage.”
Consequently, the NLC at the conference has called on the government to exempt the expected new minimum wage from taxation.
Arguements in favour of tax exemption
Members of the Organised Private Sector (OPS), who are the employers in the private sector likewise shared the view that there is a strong case to be made in favour of the exemption of those earning minimum wage from taxation.
The Director General of the Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, said the revenue realised by government by taxing workers in the category is inconsequential “Such revenue is actually not significant, whereas the welfare effect of not taxing them can be quite insubstantial. Besides, such an exemption is in line with the key objectives and principles of taxation which is to redistribute income”, he said.
Yusuf added that Taxation is all about creating an environment which allows the rich to support the poor, stating that this same principle could be extended to Micro enterprises in the economy.
“Such category of business owners should also enjoy tax exemption”, he stated.
According to him, a minimum wage of thirty thousand Naira(N30,000) is really not too much to be paid to the lowest staff of an organisation, whether in the public and private sector, taking into account, the cost of living in the Nigerian economy.
He said, “Let us take a scenario of a family man that has to pay school fees for his children, provide feeding for the family, pay for health care, pay for transportation, pay house rent and possibly even support some dependants. A monthly income of N30,000 certainly cannot cover these basic responsibilities. It is therefore even worse when we talk about N18,000, minimum wage.
“However, the challenge with many of the state Governments is that they have a workforce that is very unwieldy and not sustainable. There is also the problem of too many political appointees on the payroll of many of the state governments.
“These appointees are paid huge sum in-terms of remuneration. The third issue creating sustainability problem is leakages and corruption. Therefore, for the N30,000 to be sustainable, some hard choices have to be made and there should be better discipline in the management of government finances.”
Speaking in the same vein, the Director General of Nigeria Employers Consultative Association (NECA), Mr. Timothy Olawale who led other members of OPS to the Tripartite Committee on the Minimum Wage and equally stoutly stood behind the Organised labour at the hearing’s in the lower chamber in the defense of the N30,000 as against N27,000 submitted by the federal government, said anything below N30,000 will be inappropriate.
He said that Employers have the responsibility of taking care of their employees before they can increase productivity, stating that employers who are not paying good salary are not making life meaningful for their workers.
He stated, “We all know the value and worth of money in the present economy. The question we should ask ourselves is how far will the N30,000 go in taking care of a worker and his or her entire family.
“By the time a worker go to and fro from his/ her working place everyday, that N30,000 will substantially have gone. Don’t forget that there are also other basic needs like shelter, feeding, medicals, education for the children. So when you benchmark all those with the said amount, it can’t go far. And I want to say personally that anything below that is criminal.”
The Federal Government has presented N27,000 recommended by the Council of State in the New Minimum Wage Bill presented to the National Assembly against the N30,000 resolution of the tripartite committee.
At the public hearing organised by the House of Representatives on the bill, two of the three bodies that formed the tripartite committee, the Organised Labour and the Organised Private Sector agreed on N30,000 while the FG and Governors’ Forum insisted on N27,000.
The NECA Director General explained that members of the OPS supported labour on the issue of new minimum wage because it came out as a result of process in which they were actively involved.
“We are actively part of the discussion , decision and we agreed and believed in the discussion of the Tripartite committee. With every sense of responsibility and with the fact that we believe in corporate responsibility”, he said.
Though the Minister of Labour and Employment, Senator Chris Ngige said the constitution of the committee which he said was in consonance with the provisions of the International Labour Organisation (ILO) Convention on Nos.26, 99 and 131 was only to recommend, other members of the committee believed that governnent has no right to change the figure.
The President of the NLC, Comrade Ayuba Wabba said it was out of place and procedure for the figure to be reduced to N27,000.
“Going by the convention of the International Labour Organisation, the figure that was agreed by the tripartite committee cannot be changed by any of the parties except through a process.
“Government as an employer cannot unilaterally change the figure”, he insisted.
Minimum Wage/Living Wage
Last year, Nigeria was declared as World Poverty Capital by the Brooking Institute with the number of Nigerians in extreme poverty increasing by six every minute.
New data gathered for the World Employment and Social Outlook: Trends 2019 (WESO) also show that a majority of the 3.3 billion people employed globally in 2018 had inadequate economic security, material well-being and equality of opportunity.
The report, published by the ILO, cites the persistence of a number of major deficits in decent work, warning that, at the current rate of progress, attaining the goal of decent work for all, as set out in the Sustainable Development Goals (SDGs), particularly SDG 8 , seems unrealistic for many countries.
“SDG 8 is not just about full employment but the quality of that employment.”
Deborah Greenfield, ILO Deputy Director-General for Policy said “Equality and decent work are two of the pillars underpinning sustainable development.”
“Being in employment does not always guarantee a decent living,” said Damian Grimshaw, ILO Director of Research.
“For instance, a full 700 million people are living in extreme or moderate poverty despite having employment.”
In Nigeria workers in the country are presently considered among the poorest in the world by their present earning.
The NLC boss said with the falling value of the naira, workers were forced to insist that the minimum wage must be upwardly reviewed.
Wabba said, “When we signed the 18, 000 minimum wage, it was equivalent to $150; today, 18, 000 is less than $50.”
The Association of Senior Civil Servants of Nigeria (ASCSN) also submitted that Nigeria has become the poorest country in the world.
It regretted that Nigerian workers are the least paid in Africa despite enormous petroleum resources that have continued to be siphoned into private pockets by the political elites.
“For instance Nigeria National Minimum Wage stands at $50 per month while that of Libya is $325, Algeria $155, Chad $110, Morocco $310, South Africa $232, Seychelles $304, etc.
LIST OF MINIMUM WAGES BY COUNTRIES OF THE WORLD
1. Nigeria – $50 (N18,000).
2. Algeria – $175 (N83,000).
3. Belgium – $1,738 (N810,000).
4. Cameroon – 36, 270CFA ($75) N38,000.
5. Chad – $120 (N60,000).
6. Denmark – $1,820 (N900,000).
7. Libya – $430 (N190,000).
8. Japan – $1000 (N450,000).
9. Cote D’ivoire – 36,607CFA $72.
10. New Zealand – $3,187 (N1.4m).
11. Luxemburg – $2,500 (N1.1m).
12. Spain – $760 (N300,000).
13. Switzerland – $5,620 (N2.5m).
14. USA – $11 per hour.
The union posited that former Presidents, ex-military Heads of State and Governors who receive millions of naira monthly are pained that Nigerian workers want to receive N30,000 monthly which amounts to N1,000 per day.
“How can a worker live on N1,000 per day let alone fend for his or her spouse, four children and dependants.
“By insisting on N27,000 as a Minimum Wage for States and Private Sector employees, the members of the National Council of State have shown how insensitive and heartless they are,” the Union said.
It lamentef that instead of approving a living wage for workers, the Presidency is hiding under the National Council of State to subvert N30,000 monthly National Minimum Wage recommended by the Tripartite Committee after extensive consultations and deliberations including touring of the six geo-political zones of the country before it arrived at that figure.
“Indeed, by recommending two parallel Minimum Wage, one for Federal workers and the other for State Governments and Private Sector employees, members of the National Council of State made up of former Presidents and ex-military Heads of State as well as State Governors have given the impression before the international community that their knowledge of the global concept of a National Minimum Wage in a country is suspect.
“It is this type of decision that continues to make Nigeria a laughing stock before the comity of nations,” the Union lamented.
According to the ASCSN, the International Labour Organisation Convention 131 of 1970 stressed that the purpose of a National Minimum Wage is to “protect workers against unduly low pay and help to ensure a just and equitable share of progress to all and a minimum living wage to all who are employed and in need of such protection.”
While passing the bill at the lower chamber, Yakubu Dogara, speaker of the house of representatives, says N30,000 as national minimum wage is not enough to sustain Nigerian families.
The Speaker said a living wage is aptly appropriate for Nigerian workers rather than a national minimum wage because of the country’s harsh economic reality.
Dogara noted that there were obvious reasons why the House had to give accelerated consideration to the “very crucial bill”.
He said, “It is a bill that is long overdue, as the current National Minimum Wage, which was fixed in 2011, has become unrealistic due to supervening developments in the nation.
“Let me assure the Nigerian workers, that the national assembly is aware of and shares in your pains, patience and sacrifices as regards the issue of the national minimum wage. Majority of our members are on your side,” he said.
“While we are not oblivious of the current economic downturn and the dwindling revenue of government, we cannot also be blind to the fact that all economic indices indicate that even the N30,000 minimum wage that labour is asking for is not enough to sustain a small family unit.
“The nation may not have enough to satisfy the minimum demands of the Nigerian worker, but as a nation, we need to set our economic priorities right and ensure that we dignify our worker’s by making allowance for their minimum comfort.
“I know of no alternative if we hope to up the productivity level of our workforce.”
The speaker said since underemployment and unemployment were poverty strange bedfellows, eliminating them must be the focal point of government’s policies.
He identified corruption as a major factor that continued to fundamentally undermine democratic institutions and values.
“How then do we fight corruption from the roots rather than dealing with its symptoms as is currently the case? The answer is for us to begin to pay workers living wage not minimum wage.
Ability to pay
At the hearing, the finance minister tried to defend government, noting that total cost of the salaries paid from January to December 2018 was a total of N2.618tn, which he said represents 72.66 per cent of the actual revenue that was generated between January and December to the tune of 3.603tn.
But Organised Labour has since refuted the claim that the new wage may put more pressure on the government.
The Secretary General of the ASCSN, Comrade Alade Bashir Lawal, said government will not spend above N200 billion to pay salaries of core civil servants taking consequential adjustment into consideration.
He said that the government could pay workers the agreed N30,000 minimum wage without looking for funds as it said.
‘’Government generate huge funds from the Customs, Stamp duty payment, VAT, Treasury Single Account and many other sources.
‘’The Federal Inland Revenue Service ( FIRS) says it recorded N5.4 trillion in 2018 and is targeting about N8 trillion in 2019. These are revenue sources which can enable government pay minimum wage,.
‘’So already there is an excess of N3 trillion and 52 percent of this cannot be more than N200 billion for workers salary in a year before the consequential adjustment. The impact is not significant, as there are no workers anymore on level 1-3, those have been contracted.”
Lawal said it was sad that there are leakages through taxes which was the traditional revenue source of government at all level, but noted that the federal government could pay minimum wage within the resources it has.
The NLC president equally dismissed claims that the implementation of the new national minimum wage would lead to inflation in the country.
Ayuba said the Central Bank of Nigeria (CBN) has also confirmed it that the implementation of N30,000 minimum wage will stabilise the economy, adding that other countries such as South Africa has recently approved minimum wage for its citizens despite the recession in the country.
“The CBN recently made us to understand that the implementation of N30,000 minimum wage will strengthen the economy because this will empower and put resources in the hands of the working class. So, who is fooling who,” Ayuba said.
However as Labour awaits the reconvening of the Senate, it had expressed hope that the Senate would concur with the House of Representatives for quick passage of the Minimum Wage bill
The NLC President has said, ”We hope they will do what is right and what is expected of them by also concurring with what the House of Reps has done so that workers can have a succour because clearly, we know as a matter of fact that the current minimum wage cannot even take workers home.
”Many workers are finding it very difficult to maintain their families and have a decent life.
”So it is not a decent wage, certainly, it is a poverty wage. And therefore, whatever can be done to alleviate the situation of workers will certainly be appreciated.”