WHAT WE ARE IMPLEMENTING IS NATIONAL MINIMUM WAGE, NOT SALARY INCREASE â€“ EGBULE, WAGES COMMISSION CHAIRMAN
The National Incomes, Salaries and Wages Commission (NISWC) recently recommended a new National Minimum Wage of N18,000, which is still in draft form. The new wage was supposed to have taken off last July, but did not, to the disappointment of workers.
According to Chairman of NISWC, Chief Richard Egbule, the different organs of government involved in the implementation of the new wage have not concluded the processes. He said the draft has been sent to President Goodluck Jonathan for approval. 'After the President's approval, it would be sent to the National Assembly as a bill.
And when passed into law, it becomes a National Minimum Wage backed up by the Constitution, and is binding on all employers with at least 50 staff, the 36 states of the federation, including the Federal Capital Territory (FCT), and the Federal Government.'
He speaks more on the issue in this interview.
Minimum Wage or salary increase?
Salary increase is not necessarily establishment of the National Minimum Wage. When you say minimum wage, you must put national to differentiate it because every sector and establishment has its minimum pay, and that can be regarded as the minimum wage…but the National Minimum Wage is the one established by law, and is enforced in the country for both public and private sector for any employer with 50 staff and above. That is the National Minimum Wage.
The current value of the National Minimum Wage is N5,500, which was established in 2000. Between that year and now, the minimum salary in the various sectors of the economy and among states and Federal Government has gone up. The Federal Government, until the recent increase, had taken salaries up to N11,132 from N7,500. That is above the National Minimum Wage of N5,500 of 2000. So, this time around, to review the National Minimum Wage, a special committee was set up and called 'Tripartite Committee' because it contains three segments - the government, organised labour and the organised private sector. That was how the National Minimum Wage was fixed in 2000.
The tripartite committee was headed by a retired Chief Justice of the Federation, Alpha Belgore (GCON), and eight members each from these social partners were called and we also had eight members from the Federal Government, eight members from labour, and eight members from the organised private sector. From the organised private sector you have the Nigeria Employers Consultative Association (NECA), Manufacturers Association of Nigeria (MAN) and the Nigerian Association of Small and Medium Enterprises (NASME).
From labour, you have the Trade Union Congress (TUC) and the Nigeria Labour Congress (NLC). We also had part of the legislature. Though, from the government's side, the Federal Government supplied the Minister of Labour, the Minister of State for Education, the Minister of State for Health, and the Minister of State for Finance, plus representatives of the various state governments, and from the different geo-political zones. Their role was to review the National Minimum Wage, which they have concluded and submitted to government, and a recommendation of N18,000 has been made.
The recommendation is not yet a National Minimum Wage because it has to go through other processes, but before now salary in the public service had been increased and the least salary in the public service is about N17,000. That is not the National Minimum Wage. It is the minimum pay at the national level; the minimum salary of 01, Step 1, at the federal level. So if, for instance, the recommendation of the technical committee is accepted as it is at N18,000 per month, the Federal Government will have to adjust what was, and the state will have to adjust their pay because many states are paying below what they should.
For example, the committee consulted widely and all states of the federation were asked to submit their position on the National Minimum Wage, and they were also asked to state what they could afford to pay. Some states wrote and promised to respond, but did not. Some never bothered to respond at all. But the outcome is binding on everybody. Everybody should be able to know that the legal minimum wage enforceable in law is still N5, 500 as opposed to the salary increase the Federal Government pays its workers. And most of these increases arose as a result of collective bargaining.
What I really want you to address is this: National Minimum Wage is N5, 500. And even at that, the states cannot still pay. If the National Assembly passes this draft, I don't know how those who couldn't pay the N5, 500 could pay the new National Minimum Wage.
It is not for the technical committee to decide for any particular state. Every state had the opportunity to state its position because the National Minimum Wage is not optional. It is in the 1999 Constitution as a responsibility of the Federal Government to fix for the federation or any part thereof. Why shouldn't the state be able to pay? Is it because they have too many workers? Then, they should employ the number they can afford to pay, because they cannot pretend to pay people. If they pretend to pay, they will pretend to work for you. In essence, everybody is pretending. Nobody is working, and nobody is paying.
In Nigeria of today, who will readily accept N5,500 and leave his house everyday, and pretend to be working? That is unacceptable. But as to the quantum that would be acceptable, admissible, and can be accommodated by each state, that is the reason this is a recommendation. The technical committee recommended that the matter should be taken to the National Council of State. So, the National Council of State will have the governors representing the states. They should make their views known even if it is belated, because they have the opportunity to speak to the technical committee.
A letter was written to the governor's forum to make the position of the states known, and that would have moderated the outcome. Where were the states when the NLC was going round and asking for N50,000 Minimum Wage per month? Where were the states when the federal legislative house decided they were going to give the workers N30,000 per month minimum wage?
And the bill went straight for second reading before it was stopped, after interacting with us. A lot has really gone down. The revenue mobilisation would have asked for N31,000. The National Economic Research and Social Council would have asked for N41,000. Central Bank of Nigeria (CBN) would have asked for N20,000. All these are the key institutions in this country and they have positions in all this because they made submissions to the committee. So, I don't see why the states would not want to pay.
Were the states not allowed to contribute?
In the process of arriving at a figure that would be acceptable to all, you must take into cognizance the least employer when fixing the National Minimum Wage. If they had made their positions generally known, you will know the average the states can bear. If you put it at N2,000, they would say they cannot pay. There are people who don't believe that workers should be paid. The technical committee will analyse and see whether the states can go beyond the average. The average from all sources was N22,000. But to save the economy from unnecessary shock and to ensure the amount will be payable, it was reduced to N18,000.
The technical committee reviewed the existing minimum wage law, which was put in place in 1991. The last bill is attached to the recommendation of the committee. There are functions not targeted at anybody as long as you are an employer. Whether the government or a private individual, as long as the people you have are up to 50 and above, you must pay. If you do not pay, you will be sanctioned. There is a penalty stated in the law. If you continue to do that, the penalty will continue to increase.
Disparity between clerks and permanent secretaries
Everybody is carried along in the salary increase, and everybody got the same percentage increase. That is why there is still relativity between those that go to the treasury and those that don't go the treasury. The increase is only targeted at those that go to the treasury. For the minimum wage and unemployment, in every country of the world, there is a guarantee, a law that you must guarantee those in employment.
In fact, if you go below that, you will be prosecuted. So, you don't just get people employed and punish them by paying them something that has no meaning. They will either be corrupt, or will not come to work and their productivity will not increase, and without high productivity you will not continue in business. So, we are not even talking about living wage now because we don't say people must live so comfortably with what you pay them.
We are talking about what will take them to work and bring them back, and allow them to pay for the basic things they need. We know the difficulty Nigeria is experiencing as regards light.
Even if you are rich, you will still have to buy kerosene for the lamp; you must buy something to cook with and also your transportation. If you must give people employment, then that employment must have value. Apart from keeping them busy, you must ensure there is a deliverable outcome, and you can't get that unless you pay well.
The issue of going out of job is if we are sure we want to engage people in jobs so they will do something. In some states, it is just a social thing to get people employed and they will do nothing. It is not supposed to be like that. In developed countries, when you are employed, you must do something. If there are people who come to work by 12 noon and then leave by 3 p.m., it means they are not needed by the establishment and the establishment can do without them.
Is it not better to have well paid people who can produce than to have people who will do nothing and still get paid? Yet, it will not be enough to encourage those ready to work. That was the same reason why sometime ago the Federal Government embarked on retrenchment of the few that are not working so that more money would be available to those who are working. Whether all of them sent out are out, or some of them found their way back only God knows.
I agree with you that because of the level of employment we have you can't pay well, because if you do, you will use all the resources for payment of salaries. Many people you see in employment are not really in employment because they find something else to do somewhere, and will not be working for you full time. They will be moonlighting, looking for a place to make body and soul meet. So, it is better for you to employ those who will do the work for you, except you have no work and you don't employ anybody at all.
What are the social effects?
The social effects are that it will open up the economy. Minimum people should be employed in small-scale enterprises. The private sector should drive the economy and not the public sector. The public sector can only provide enabling environment. If you provide an enabling environment, then people will find employment because a lot of employment opportunities will be generated in the private sector. If everybody wants to sit in the office, then who will go there to produce something for our consumption?. Otherwise, most of the goods bought from abroad are supposed to be produced here.
Does the National Minimum Wage also cover the private sector?
Yes. For any employer that engages 50 staff and above; but there are exceptions of people engaged in agriculture, which is seasonal employment, construction, and some parts of shipping and all that…because of the conditions in those areas, you can't give them minimum wage. They decide what to pay.
A construction worker may come in and tell you what they want. In agriculture, if you do that you will only create problem, because you may not have enough hands. Some people who go into agriculture don't pay heavy wages because it takes time for agricultural produce to mature and be sold. So, all these people are exempted.
Some people may ask why do you have salary? That in some countries they do not have salary, and minimum wage is not made as salary, and should be direct. In Nigeria, in the public service we don't have daily paid workers anymore. So, if you don't have your salary you will be paid daily rate.
There are no daily paid workers in the public sector. That has been abolished long ago and that is the reason why we don't use it. It is only when they come that you will pay them. If they come for three days, you pay them for three days.
If NNPC is broke, how can the country pay this huge sum?
I understand also that they are denying that it is not true NNPC is broke, but what I know and have heard is about the joint venture cash call, which they say is draining a lot of money from the sale of our crude oil. We can decide not to have a minimum wage, but it is too late in the day now. The first minimum wage we had was in 1981 and it was revised in 1991. It was actually 31st December, 1990, to 1st January, 1991.
It was revised again in 2000. So, it is not new. National Minimum Wage had always been there and each time the minimum wage was revised, it was relative to the time and the difficulties of the time. By that I mean there was a time it was N125, then N250. There were difficulties during those times, too. So, you can imagine somebody being paid N125, N250, and N5,500 and is still surviving. Times have changed. If you take the N5,500 for the last 10 years and you have been revising it anytime there was an increase in inflation, you will get very close to N15,000.
In 2003, there was a salary increase of 12.5 per cent, which used to apply to National Minimum Wage, but it applied to the minimum in the public sector. Then, if you go to 2007, there was a 15 per cent increase, which was supposed to apply to the outcome of whatever you get after applying 12.5 per cent. There was no way the minimum wage would have been if we used the issue of increasing minimum wage when increasing salary. Now, salaries have also been increased, and then if we apply it, where would it take us? These are some of the issues. It is not that we fix minimum wage and after 10 years it is not revised.
Who on earth will earn the same salary for 10 years without change? In most civilised countries, it is revised annually and sometimes every six months. You review it and it keeps moving on. But we have not done anything about it in 10 years. Then, the question is, what level? The team recommended N18,000. I cannot tell you that the recommendation of the technical committee is right or wrong.
What is my own personal position? That is irrelevant here, because I have made my position known during the discussions. This is the position of the committee. It is not the last, from the look of things. They can still have a look and consider it vis-Ã -vis development of the economy, including what you have just said, assuming the economy is unable to support it.
It is all about the Federal Government and the economy, because it is for both the public and the private sector. If the economy can't support it, then they have to do something about it before it becomes law, now it has not become law, it has only been recommended. There is an option. In the process of looking at it and getting it approved, other considerations can also come up and they may, if they want, bring it down. But if they are satisfied with it, they can leave it because the decision is a recommendation. It's not yet a law.
Is it in the National Assembly?
It is not yet there. It has been submitted to the President and to get to the National Assembly, it will go as executive bill. I think if the recommendation of the committee is adopted, it will still have to be cleared by the President and other members of government, before it will form part of the bill to the National Assembly. The recommendation this time around is not for it to become the law, but the institution revising it will be in the law. This time around the amount is not going to be in the law. Only the institution revising it will be in the law.
Is the President putting up a self-revising salary structure?
He said so in relation to another situation, because of the incessant price. And so there was a need to put in place an institutional mechanism. to that extent he set up what we call a National Committee of Experts under the chairmanship of Professor Diejumo with about 10 members drawn from different walks of life. I am a member. We are working on fixing and revising salaries automatically. The technical committee on its own recommended an institution that can be doing that for the National Minimum Wage.
Are these two committees working independently?
Has the commission made final input?
I, as chairman of the National Minimum Wage Commission, served as secretary of the national committee. That means the secretariat of the technical committee was with the commission. So, all the inputs we made with the committee are there. But if the President demands further inputs from us, or further clarification and work from the commission, of course, we will do that.
It is not something that you give to one side to go and tinker with; that is why there is need for consultation. If it were for federal alone, we can deal with it here, but it is for the whole country; the public and private sectors. From the individual states to the federal, it must be applied once it has been accepted. That is why they are carefully looking at it. The President will not prescribe; he will continue to consult until he is satisfied that every party has played its part to the fullest. Only then can he forward the draft to the National Assembly.
Do you think the salary increase will be realistic this month?
We have finished with salary increase. We have signed all the circulars. The people are entitled to know whether the salary will be paid this month. For those in the public service, we have what we call salary increment and it takes effect from January 1. But you don't get paid in January. Before they finish the thing, you will be paid in March, but you will be paid anyway.
The salary increase will be funded through the supplementary budget. And the supplementary budget is in the National Assembly now. They are working on it. Meanwhile, the instrument for paying it has been released, which is the circular. All circulars relating to salary increase have been released, except one concerning research institutes because they are still negotiating some areas. As soon as that is done, it will be released. Then, the circulars have stated that things will take effect from July 1. It is not changeable. It all depends on how soon the bill scales through and then the money will be released to the Ministries, Departments, and Agencies (MDAs).
So, what you are saying is that workers will not receive the new salaries this month?
I don't see any miracle that can make it happen or when the appropriation bill will scale through. It is already half of the month, and the appropriation bill has not been passed and signed into law. So, where will the money come from? You cannot just decree that there should be money. This is a democracy, and the process of allocating money is through the National Assembly, and that process has already begun. So, when the National Assembly passes the appropriation bill, which contains the amount for payment, the normal processes will go through and it will be released.
I don't think it is automatic, and that is why, if you noted, when the decision was taken in June, or late May, one would have expected that it would have been immediately we issued the circular, but we didn't because we do not want to raise the expectations of people. If we had issued the circulars, people would have asked why we issued the circulars and did not pay, so we issued the circulars when we were sure the appropriation had been taken to the National Assembly. They are working on it. It takes time to get these things done.
On monetisation, what is the implication?
You know what happened last time. Half was paid; the other half was to be paid. And it was to be included in the budget. Because they were still verifying the time the budget was on, I cannot tell you now that I am hundred per cent sure the funds were part of what was verified, but I can't speak authoritatively on this matter. So, all we need is for people to be patient until the money comes out.
It is not an issue of whether it will be paid or not. When they have passed this stage of whether it will be paid or not, that was the naughty issue. It is not a question of cannot pay, it is a question of when, and they are working on it. I think the money will come.