Adetokunbo Pearse
The sequence of events relating to the N30, 000 minimum wage signed into law by Senate on 18th March, 2019, and promptly passed onto states by the President for implementation is another disturbing illustration of the hypocrisy which has come to characterize the National Assembly and the Presidency. Both want to give the impression that they are acting in the best interest of Nigerians whereas in fact their main objective is self-aggrandizement. By enacting good laws they congratulate themselves that they have fulfilled all righteousness. They fail to take into cognizance that legislative announcements withoutenforcement are false and empty promises.
At the core of their insincerity is the fact that many state governments have not complied with the last mandated minimum wage of N18, 000, and federal government has not compelled them to do so. It appears that federal government is reluctant to compel states to pay a minimum wage because it is aware of tremendous economic burden borne by states. When one considers the debt profile of the states; the various other payments they have to make to citizen groups such as pensioners, it becomes clear that it is unrealistic to expect them to meet the minimum wage challenge.
Consider the debt profile of the worst offenders (from State of States, 2018 Sub-national Salary Survey), Abia owes secondary school teachers and secretariat workers 5 months’ pay, while pensioners have not received their dues in 18 months. In Adamawa state, the outstanding salaries for teachers is2months and 4 months each for civil servants and midwives of state hospitals and 13 months for pensioners.
Akwa Ibom is 12 months behind in paying pensioners. Bayelsa is owing 3 ½ moths to teachers and civil servants, and owing 7 months to pensioners. Benue owes 11 months to teachers 9 months to civil servants and 12 months to pensioners. Delta state is owing pensioners an outstanding of 36 months. Ekiti owes 5 months each to teachers and secretariat workers and 9 months to pensioners. Imo owes teachers 7 months and pensioners 34 months. In Kogi state where secretariat workers are paid only 50% of the agreed salary, the state owes 2 months each to pensioners and secretariat staff and 13 months to teachers. Kwara state owes 4 months areas to teachers. In Osun State, 15 months’ salary is owed teachers, 15 months to secretariat workers and 15 months to pensioners. Plateau’s debt is mainly to pensioners in the tune of 16 months outstanding. Taraba and Zamfara both owe pensioners 2 months areas while another 4 months is owed to teachers in Zamfara.
Add these debts to the cost of paying a minimum wage of N30, 000, and the salary increase up the civil service ladder. After all, if cleaners and messengers begin to earn N30, 000 monthly, salary of a University graduate on level 8 which is currently N49, 000 will go up to about N65, 000. Level 13 pay currently at N75, 000 should rise to over N100, 000.
Nothing can excuse the economic and financial misdeeds which are prevalent in states. We should also not condone abuse of power by governors, who become instant billionaires with extravagant security votes. But saving money from state excesses alone will not provide funds to meet state financial obligations.
The government’s submission that increasing value added tax (VAT) will raise funds to meet minimum wage payment exposes an ignorance of basic economic forces, or perhaps, a non-challant attitude to its negative impact on citizens. With VAT increase the price of basic commodities as well as service charges will go up exponentially. Inflation will neutralize the wage increase. Life will get worse, not better. The VAT increase is tantamount to robbing Peter to pay Paul when Peter is in fact, a pauper. How much tax can be collected from a population with an unemployment rate of over 50% and an average monthly income of less than N60, 000 (about $168).
The established economic model by which governments meet financial obligations is to grow their economy. When an economy is healthy and strong, businesses make money and employ workers. It is that tax to government from both employers and workers that enriches the government. Only after the federal government has increased its tax base can it find money to pay its bills.
The Nigerian economy can be stronger than it is presently only if the country finds other sources of revenue and new ways to raise capital. Our economic system must be restructured; diversified to add mechanized agriculture and minerals development to crude oil production. But the biggest boost to the economy will come from a decentralization of the Nigerian economy. By this, we mean that the federal government must release the control of mineral resources of states from exclusive lists controlled from Abuja. State governments must be given constitutional rights to explore, develop and market their resources with foreign partners of their choice without recourse to federal government guarantee.
If this happens, Abia, Imo, Anambra and Enugu can use their crude oil, iron ore and natural gas. Ekiti, Lagos and Ondo their bauxite, crude oil and bitumen. AkwaIbom, Rivers, Bayelsa, Cross rivers, Delta and Edo their crude oil and uranium, Jigawa, Zamfara and Kebbi their Iron ore, copper and bauxite, Adamawa, Bauchi, Borno, Gombe and Taraba, their iron ore, uranium, copper, Benue, Kogi, Nasarawa, Niger and Plateau their iron ore, copper, and bauxite, Gold and uranium to liberate their economies.
With such positive and robust economic activity from multiple sources, the federal government, state governments as well as the private sector will be able to negotiate higher minimum wage rates in good faith. Additionally, they will be better equipped to invest in education; human capacity building which for any society is the single most vital engine of development.
Dr. Pearse is a Public Affairs Analyst, and an Associate at the Institute of African and Diaspora Studies, University of Lagos