Economic Realities Render Nigeria’s N30,000 Minimum Wage Insufficient

Demonstrations and protests from labour unions seeking an upward review of the N18,000 minimum wage yielded positive gains as President Muhammadu Buhari signed a new minimum wage of 30,000 naira for the workers in April.

The approval came after several months of dilly-dallying from the government’s end as it repeatedly constituted committees that were to see to the review of the workers’ salaries.

Relying on data from WageIndicator, an organization that compares wages across the world, Dataphyte analysed the income of an average Nigerian worker under the newly approved wage in comparison to their expenditure.

According to the expenditure and living wage calculation by Wageindicator released in 2018, a single adult in Nigeria spends 32,680 naira on basic needs monthly.

In the monthly breakdown, a single adult spends an average of N17,800 on feeding; N6,820 on Housing; N5,000 on transportation; N1,500 on healthcare and 1,560 on other costs.

WageIndicator further indicated that a standard family of two parents and two kids spend an average of one hundred and thirteen thousand, three hundred naira (N113,300) monthly.

This is with N71,150 on feeding, N16,750 on housing, N10,000 on transportation, N6,000 naira for health, N4,000 for education while N5,400 goes for other expenses monthly.

It should be noted that some luxuries, clothing, unforeseen contingencies… were not catered for in the breakdown above.

It is also clear to see that while it requires more than one worker’s salary to cater for the needs of the single adult, the monthly minimum wage of two persons still cannot provide for the needs of a standard family under the newly approved wage rate.

Meanwhile, in an interview, the general secretary of the Nigerian Labour Congress (NLC), Peter Ozon-Eson, admitted that the sum is paltry considering the cost of living in Nigeria.

“the economic reality has been taken into consideration in the process. If we were to follow what the cost of living is and what will successfully cater to the needs of a worker and the family, the amount will be regarded as grossly inadequate.”

He also explained that the feasibility of payment by employers necessitated the agreement of 30,000 naira, which he described as a ‘middle ground’ for both the employers and the workers.

“But part of the economic reality is also the ability of the employer to pay without laying off workers or shutting down. All these have been taken into consideration and that’s why a middle ground, which is the 30,000 naira has been agreed,” he said.

Buttressing the data, Busayo Morakinyo, the Community Engagement Manager of Connected Development (CODE), an advocacy group, said;

“I personally believe that 30 thousand minimum wage is not enough based on various parameters. If you’re a single man and you get into the civil service today with an earning of 30k in Abuja for example, the cheapest rent you can get is 200 thousand Naira upward. So 30000 multiply by 12 months, that gives 360,000.” If we are actually serious, our budget doesn’t even contain our economic reality,”

Speaking further, Mr. Morakinyo advised that the federal government should consider the right data when planning the budget.

He said;  “I’d say we should go back to the books, how many people do we have in Nigeria? We need to know the data, then we will begin to provide needs based on the number of people we have in Nigeria. So that our budget would cover the yearnings and aspirations of Nigerians.”

States still Owing workers under 18,000- wage threshold

With the clamour for a minimum wage increase and the government assent that followed it, it is doubtful if some states owing workers salaries under the 18,000 Naira minimum wage, will not further default in paying their workers’ salaries under the newly approved 30, 000 Naira minimum wage regime.

According to a 2018 report from BudgIT, a civic organisation that advocates for good governance, over 15 states out of the 36 federating units owed certain categories of their workers more than five months’ salaries and pensions under the former 18,000 minimum wage.

While some states are owing percentage salary due to modulated payment, some are owing full salaries.

In 2016, Imo workers entered an agreement with the state government on payment of 70 percent salaries with the exception of those on grade levels 01 to 06 that receive 100 percent. The reason for the percentage of salary was attributed to the national economic recession.

Also, for up to 30 months, the Osun state government has been paying workers above grade level 7, only fifty per cent of their salaries.

Meanwhile, Abia State was owing to its secretariat workers and secondary school teachers five months’ salaries, and pensioners 18 months.

Adamawa State as at October 2018 owed its secretariat workers four months salaries, its staff midwives four months, its secondary school teachers two months and pensioners thirteen months.

In Zamfara, secondary school workers are owed four months and pensioners two months’ arrears, according to BudgIT.

In Benue state, the arrears owed vary by levels but workers in levels 8 to 10 are owed between four and eleven-months salaries. Samuel Ortom, the governor, in August 2018, said he inherited over N69 billions of unpaid workers salary arrears, pension and gratuity and over 70 billion for other engagement of government.

BudgIT findings show that Kogi state pays secretariat workers only 50 per cent of their salaries while midwives receive only 40 per cent. Despite this, salaries and pensions being owed workers range from 2 to 13 months’ arrears, according to the report.

Kwara government owes secondary school teachers four months’ salaries as of October 2018.

Amongst many, ‘debtors’ agree to pay 30, 000

Following the order from the presidency that federal parastatals and state government should commence the implementation of the new 30,000-minimum wage, some ‘owing’ state governors are included among those who pledged to comply.

Although some of the governors like Rotimi Akeredolu of Ondo State, Gboyega Oyetola of Osun State and Yahyah Bello of Kogi State earlier indicated,  before the President’s assent, that the new wage regime was not feasible based on fiscal reasons, however, they  made a U-turn on May 29, a day set aside for workers celebration.

Kano, Zamfara, Kwara, Rivers, Kogi, Osun, Cross Rivers, Delta, and Edo state government in recent reports promised to implement the new minimum wage guidelines when released.

Governor Abdul Aziz Yari Abubakar, through his Senior Special Assistant on Media, Publicity and Public Enlightenment, Malam Ibrahim Dosara, said that  Zamfara State under his watch would do everything possible to ensure the welfare of workers in the state does not suffer.

The Kwara State government also announced its readiness for the payment of the new minimum wage, according to Governor Abdulfatah Ahmed’s Senior Special Assistant on Media and Communications Dr Muyideen Akorede.

Akorede recalled how the state government set up a committee headed by the Head of Service Modupe Susan to work out the modalities and sources of revenue for payment months before the president signed the new minimum wage into law.

“The committee is expected to submit its report to Governor Ahmed in the next two weeks,” he said.

Similarly, Kogi State government says “laws are made to be obeyed and we are sure the Federal Government will make it convenient for states to pay the new minimum wage.”

It welcomed the signing of the bill into law stating “a committee was set up to look into the modalities of making compliance easy. Kogi State will work with whatever is agreed by the Governors’ Forum.

“As a government, we will also look inwards to ensure we put smiles on the faces of our civil servants who have shown unprecedented cooperation with our administration.” Mr. Yahyah Bello said.

Blinking hope with IGR, FAAC Disbursement indicators

In a report of the Nigerian Extractive Industries Transparency Initiative (NEITI) published by PREMIUM TIMES, the total Federal Account Allocation Committee (FAAC) disbursement to the 36 states and the Federal Capital Territory (FCT) Abuja between January and March this year dropped significantly as a result of declining global oil prices, slightly affecting government earnings.

The latest report by the NEITI said total disbursements by FAAC to the states in the first quarter of this year stood at about N1.929 trillion.

The NEITI review attributed the reduction in FAAC disbursements to the drop in global crude oil prices during the period.

“Crude oil prices experienced a downward spiral from November 2018, from above $80 per barrel in October 2018 to about $57 per barrel by December 2018.”

“Average oil price for the first quarter of 2019 was $63.17 per barrel, against the corresponding price of $71.06 per barrel for 2018.”

“Thus, oil prices have been considerably lower in the first three months of 2019 than they were in 2018,” the Review said.

In addition, the NEITI Review posits that total state revenues (FAAC and Internally Generated Revenue (IGR)) in 2017 and 2018 cannot fund 2019 budgets of 28 states.

“There is no state whose net FAAC disbursements in either 2017 or 2018 can adequately finance their budgets for 2019. Net disbursements to states in 2017 as a percentage of the 2019 budgets ranged between 2.25 per cent (Cross River) and 43.1 percent (Yobe).

Also, net disbursements to states in 2018 as a percentage of 2019 budgets ranged between 3.54 per cent (Cross River) and 57.7 per cent (Yobe).

The report further highlighted “the gap in the capacity of FAAC disbursements to finance state budgets made it inevitable for most of the states to rely more on borrowing as against the urgency of embarking on creative measures to improve internally generated revenue (IGR).”

NEITI Quarterly Review identified only three states – Lagos, Rivers and Ogun – as positive examples in IGR performance.

Similarly, the NEITI publication identified Yobe as the only state that can fund its 2019 budgets from combined FAAC allocations for 2017 and 2018.

Another significant finding in the NEITI publication is how huge sums were being deducted directly from FAAC allocations of some states to service their debt obligations.

For instance, about N7.27 billion was directly deducted from Osun state allocations while Cross River State has 53 per cent deductions from its allocations.