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States And Minimum Wage

Posted: Mar 22, 2016 at 3:00 am   /   by   /   comments (0)
Recently, Governors of the 36 states of the federation rose from their meeting in Abuja, declaring that it had become for the states, a huge burden to pay civil servants in their respective states, the N18, 000 minimum wage. Reading a communiqué of the governors after the meeting, Abdulaziz Yari, Governor of Taraba State and Chairman of the Nigerian Governors Forum (NGF), attributed the inability of the states to pay the minimum wage to a sharp crash in the monies accruing to the respective states from the federal purse, as a result of the fall in the oil revenue.
Still disappointed over the national minimum wage bill, the governors contended that it was imposed on the states by the Federal Government and had not been easy carrying the burden, since its implementation in 2011.
What did the governors offer as panacea for the supposed burdensome national minimum wage? As stated in their communiqué, they would carry their concerns to President Muhammadu Buhari. They would also discuss with him on the need to diversify the country’s resource base by investing more on Agriculture and Mining. But that is a long-term remedy.
Unexpectedly, the governors’ alarm on the minimum wage attracted immediate reaction. The leadership of Nigerian Labour Congress (NLC) rejected any attempt by the governors to tamper with the workers’ salaries, as currently profiled under the national minimum wage. The Labour contended that the N18, 000, as currently being paid could not even be termed as realistic living wage for Nigerian workers, given the downturn in the country’s economy and the skyrocketing cost of living. Curiously, Governor Adams Oshiomhole of Edo State had also dumped his colleagues, insisting that the issue of the minimum wage was a statutory, which provided no governor any escape route.
The concerns of the governors over the minimum wage must be put in perspectives, both within the relevant statutes and the current realities of the nation’s economic challenges. First, the governors’ claim that the Federal Government imposed the minimum wage on the states is preposterous, since the promulgation of the National Minimum Wage Act of 2011 was by the consent of both levels of government. It is futile thinking of an escape from the wage bill, as the governors know it will require an amendment to the Act for any review of the N18, 000 to be effected. It then stands to reason that the governors had merely put forward the issue of the minimum wage to arm-twist the Federal Government into giving the states more free money in the cloak of the bogey bailout funds it released recently for clearing of unpaid workers salaries.
As a way out of avoiding widespread national crisis over the welfare of government workers, states must under the law be empowered to fix salaries of their workers, according to their individual capacity to pay. However, this should be contingent upon the revenue base of the states.
We advocate the need for a review of the country’s constitution to invest the states with powers to explore and exploit the resources in their various domains as was in the 1963 Constitution, which allowed the old regional governments to thrive and prosper without being a burden on the government at the centre.
Even as the revenue structures are currently operated, the Federal Government must create an incentive platform to reward the states, according to the amount of Value Added Tax (VAT) they individually generate to the national treasury. That way, states with high yielding VAT profile would continue to deepen their collection efforts, while the lower ones too would be challenged to work harder on their sources of Internally Generated Revenue (IGR)
The cries of the governors portend that the era of uniform salaries for government workers under the guise of national minimum wage must end. Truly, the issue calls for review, but the states revenue base must be strengthened, as they would be left to cater for their workers within their individual capacities. To continue to agitate that a worker in sophisticated cities as Lagos, Port Harcourt or Abuja is paid N18, 000, as a worker in the low end areas of Osun, Zamfara or Yobe is inequitable and a dis-service to those workers in the cosmopolitan areas.
Both Government and Labour must reconsider the social and economic disparities among the federating states, so as not to be unfair to anyone in their obligations to the workers