Tuesday, 30 July 2013

Rejoinder: NLC And Minimum Wage; The Issues


By Salihu Moh. Lukman

The response to the piece on NLC and Minimum Wage: The Task Ahead by Dr. Peter Ozo-Eson is to say the least a confirmation that NLC positions are “driven by large dose of intellectual and organisational indolence” as argued in my article of July 3, 2013. All that Dr. Ozo-Eson laboured to state was that “Mr. Lukman went on his usual tirade of seeking to run down the leadership of the Congress”.

The evidences are: First “on a number of occasions in the past, he had embarked on this same limelight seeking and self serving mission, but Congress had decided to ignore him as he was not really anybody of consequence”. Secondly, “in the process leading to the fuel price increase in 2011, he played all manner of behind the scene games of trying to undermine the NLC’s opposition to the planned increase”. Thirdly, “in the course of hearings on the issues proposed for constitutional amendment, flaunting his new credentials as consultant to the Governors Forum, he made puerile arguments as to why some states cannot pay the minimum wage.” Fourthly, “he also had, shortly after the end of Comrade Adams Oshiomhole’s tenure as President of the Congress, issued a statement in which he berated the comrade and sought to run him down.”

The judgement passed by Dr. Ozo-Eson after examining all the evidences was that the article NLC and Minimum Wage: The Task Ahead clearly demonstrates that he lacks knowledge and understanding of the theoretical underpinnings of national minimum wages and even the empirical information of the process and mechanisms for the setting of the minimum wage in Nigeria”. To confirm that, Dr. Ozo-Eson asserts that “while he was a staff of the Congress, he was not involved in the formulation of positions on this matter and the negotiations which preceded the setting of the minimum wage. Unfortunately, illusions of grandeur would not allow him seek available information and knowledge on the subject matter.”

It is important to start by submitting that I make no claims to being an authority either with reference to educational qualifications or experience in every respect. The article under reference makes no such claims. All that was done was to highlight realities supported by indices from authoritative sources, which should guide the process of minimum wage fixing in Nigeria. The central issue in the article was the argument that the process of passage of the 2010 Minimum Wage Act was dictated by the capacity of the Federal Government to pay the N18,000.

It is gladdening to read from Dr. Ozo-Eson’s response that “the process involved the setting up of an ad hoc Committee, which made recommendations to the Federal Government. The committee was composed of equal representatives of the tripartite partners of government (including the State Governments), Employers’ representatives and Workers’ representatives and was chaired by Justice Alfa Belgore.” This should mean that there was some evaluation of capacity to pay based on indices. This is where one would expect some demonstration of good scholarship. Unfortunately, beyond the personalised attacks and name-calling, there was none.

Being the Research Director of NLC, it is well below expectation to reduce the debate to simple demonstration of loyalty to the leadership of Congress. I am pretty conversant of the schedules of Dr. Peter Ozi-Eson as the Research Director and would expect that he played the role of a leading guide to the NLC leadership during the process of negotiating the passage of the 2010 Minimum Wage Act. Given that he is an economists who rose to the position of an associate professor, he should be regarded an authority on issues of wage fixing. The sad thing is that reading through his response, one cannot but be worried about the fact that he has collapsed to elementary reasoning. If what he wrote was credited to some of our political leaders in NLC who flaunt commercialised Doctoral or self-professed “Professorial’ credentials, one would understand. But coming from a seasoned academician with good research capability, this is simply scandalous.

This much said, I will try and highlight the issues so that we don’t reduce the debate to personality assessments. My article of July 3, 2013 was prompted by a media report where Comrade Abdulwaheed Omar, the NLC President argued that amending Part I, item 34 of Second Schedule of the 1999 Constitution “will unnecessarily expose Nigerian workers, especially those in the low-income bracket with grave implications for security, productivity and national well-being, as most state governments if given the latitude, will pay wages as low as one thousand Naira per month in spite of the relative enormous resources available to them.”

What is very clear from the position expressed by Comrade Omar was that state governments would pay low wages “in spite of the relative enormous resources available to them”. I argued that this position is weak and erroneous and supported my position with facts as provided by CBN. The facts are:

No doubt, with reference to our recent past as a nation whereby the total annual revenue of government was in the region of N2 trn, current levels of N8 trn is relatively “enormous”. The critical reality however is that this increase in revenue is not shared proportionately. On account of what can we regard states like Ebonyi and Nasarawa as enjoying “enormous resources” with less than N4 billion monthly from the Federation Account, while states like Akwa Ibom and Rivers receive more than N20 billion monthly. Perhaps with reference to a personnel cost of approximately N500 million for Ebonyi and Nasarawa, the argument for “enormous resources” may be sustained.

This financial profile is almost re-enforced by IGR profile of these states. Based on CBN 2010 Report, Akwa Ibom is reported with more than N1 billion monthly IGR and Rivers close to N5 billion monthly. Contrastingly, Nasarawa and Ebonyi were reported with less than N200 million monthly IGR. Now what will be the logic of equating the pay of workers in Akwa Ibom and Rivers with that of Nasarawa and Ebonyi?

With monthly personnel cost of approximately N500 million and monthly IGR of under N200 million, a situation where FAAC receipt crashed can be better imagined. How then can anyone be making a case for wages based on such a loose foundation?

I want to go a step further by inviting the NLC to consider the case of Edo with monthly personnel cost of about N1.42 billion. This is pre 2010 minimum wage. Current levels will be somewhere in the region of N1.7 billion. In June 2013, Edo State got N1.9 billion as its FAAC share. Based on CBN 2010 report, Edo has IGR of slightly above N1 billion. This means that Edo has total revenue of about N3 billion monthly based on which nearly 60% goes to settling personnel cost. Edo state reality represents virtually the situation of all our states with the possible exception of Lagos and Rivers.

It could be tempting to argue that this reality does not exist. This will be suicidal. Should there be any adverse situation in the international oil market affecting oil revenue and the share to states, many states will not be able to meet their personnel cost. One of the issues that Dr. Ozo-Eson knows very well but avoided it completely in his response was the issue of wage fixing. All that appear to be appealing to Dr. Ozo-Eson and NLC was the historical evolution of minimum wage. For clarity, I never contested the existence of minimum wage.

My argument is that revenue capacity of employers should be the guiding consideration and not some pedestrian and unscholarly analysis of countries that are implementing minimum wages. The logic of minimum wage cannot be faulted. The main problem in our case in Nigeria is that once the federal government, with reference to its revenue of over N8 trn annually can pay the N18,000 minimum wage, we imagine that the remaining task is to harass state governments and all other employers in the country to pay.

For the federal government, the minimum wage of N18,000 only represented an increase of 1.15% in its personnel cost. This represent an absolute increase of N11,054,309,926 on personnel cost of federal government, which means an increase from N961,118,726,036 to N972,173,035,962. Increase of 1.15% was made possible because at the time of negotiations, the lowest paid federal government worker was earning around N17,000. Unfortunately, the lowest paid worker in most of our states and other sectors were still earning the then legislated N5,500 minimum wage. For whatever reasons, largely political coinciding with the buzz of the 2011 electioneering period, the reference for a new minimum wage legislation in the country became federal government.

The question I expected Dr. Ozo-Eson to answer will be how does a minimum wage of N18,000 relate with wage determining variables such as the value of marginal product of labour for state governments and other private employers. For an economists with the knowledge, experience and if I may venture to add level of pay of Dr. Ozo-Eson missed such an important component in his analysis would appear to be deliberate aimed at misleading NLC leadership and Nigerian workers. Such an approach can only produce false expectations and consequently result in dashed hopes.

There is the attempt to resort to cheap blackmail and presenting my position as if I am opposed to minimum wage. To the contrary, I am for minimum wage fixing. Desirably, this should happen at federal level but given a reality whereby combination of authoritarian and rent-seeking factors have dominate the process of governance in Nigeria, one of the best ways of injecting rational consideration is to decentralise the framework for minimum wage fixing. There is nothing wrong with that and it will be consistent with ILO framework.

In fact, the legislated N5,500 that was reviewed upward to N18,000 with the passage of the 2010 Minimum Wage Act, had a provision that stipulated federal government minimum wage at N7,500. This was not a secret. It was a mark of intellectual laziness on the part of NLC leadership to miss this convention.

Dr. Ozo-Eson may wish to explore other deeper intellectual debate around issues of how higher minimum wage can facilitate employment or produce unemployment. Issues of labour market structure, competition, etc. may help highlight all our options. Certainly, the varied nature of the labour markets across the country does not support a high minimum wage of N18,000. Given high levels of poverty, low minimum wage would also be counterproductive. There is therefore the need for a good balance taking into account issues of labour market structure, capacity to pay and the challenge of tackling incidences of high unemployment in the country. They are all interconnected and poor handling could create disequilibrium with adverse consequences.

The other issues are the personalised attacks and sincerely, I have no apology for my position and it is unfortunate that Dr. Ozo-Eson think the debate about minimum wage in Nigeria based on the challenges of today can be reduced to name-calling. I am grateful to Nigerian trade union leadership for giving me the opportunity to serve and I did so with the full conviction that Nigerian workers represent a progressive category. With a rich tradition embodied by organisations such as Nigeria Labour Congress, I was proud to be part of the community of progressive Nigerians.

In all these, Comrade Adams will always have a special acknowledgement. One thing that was very unique was the fact that our relationship with Comrade Adams up to the end of his tenure, and for me till today, was not sycophantic. It is a relationship of respect based on capacity to speak the truth. In line with that tradition, in March 2007, I wrote an article, which for the avoidance of doubt, I will reproduce below. After the article, I have had further engagement with Comrade Adams, but at no time did he accuse me of attempting to run him down, as Dr. Ozo-Eson is alleging. I am ready any day, anytime to defend myself, but I need details of the charges.

I will kindly appeal that the charges should specify details of the “number of occasions in the past”, I “embarked on this same limelight seeking and self serving mission”, which Congress decided to ignore me. Being “not really anybody of consequence” and one that respect the NLC and its leadership, I will try and defend myself. Dr. Ozo-Eson made claims that “in the process leading to the fuel price increase in 2011”, I played all manner of behind the scene games of trying to undermine the NLC’s opposition to the planned increase”. This is weighty.

To the best of my knowledge, sometime around September 2011 when the issue of removal of subsidy became public, together with Comrade Salisu N. Muhammed and Dr. Timi Agary, we developed engagement template to facilitate consultations across all the stakeholders including labour. Our strategic thinking was that what is required is consultation which should lead to negotiating the whole downstream situation that is producing a cycle of policy announcement – opposition protest – negotiations. In our reasoning, we felt the need to produce a new reality of policy negotiation – agreement – announcement – implementation.

In order to achieve that we came up with some activities and approached NLC, TUC, NUPENG, PENGASSAN, NARTO, NURTWN, NECA, PPPRA, NNPC, the Presidency, some civil society organisations to agree to participate in some preliminary activities. The interesting thing was that almost all the nongovernmental stakeholders participated in the activities but none of the government organisations participated. As a result, the initiative collapsed. However, the leadership of NLC, just like all the other organisations were fully briefed about our line of thought, based on which they subscribed and participated. It was an open process and everything was made public. I will challenge Dr. Ozo-Eson to come forward with all the evidences he has about “behind the scene games of trying to undermine the NLC’s opposition to the planned increase”.

The last issue is that “in the course of hearings on the issues proposed for constitutional amendment,” I flaunted my “new credentials as consultant to the Governors Forum” and “made puerile arguments as to why some states cannot pay the minimum wage.” Since they are puerile, why should it be the pre-occupation of the almighty NLC Director of Research? Why not ask a clerk to respond to expose how childish they are? Where did I flaunt my so-called credentials as consultant to the Governors Forum? To the best of my recollection, it was at the parley between civil society leaders and President Goodluck Jonathan and Comrade Omar was there representing the NLC. It was not a matter that was secret and I canvassed my position as a Nigerian citizen with privileged information, which I shared. Does anyone in NLC expect that our views on matters of national policy must be the same?

This is the trouble when organisations choose to be passive in national policy debate and the only thing they are able to do is to organise strikes against government and employers. Matters of policies and engagement to influence them are not prioritised. This makes strikes the only objective of why organisations like NLC and trade unions exist. With such disposition, NLC need no Research Director with Professorial credentials except if the Research Director is a shop floor activist. This is the sad reality facing Dr. Ozo-Eson and our dear NLC. I never expected compliments from NLC leaders, especially people like Dr, Ozo-Eson who know better.

By the way, sincerely, I want to congratulate Dr. Ozo-Eson for producing his first public statement as NLC Director of Research after about 12 years. I remember, when we were consulting and trying to gather supporting information for his employment as NLC Director of Research, one of the criticism against him was that he has no publication credited to him and as the researcher for the Port Harcourt based Centre for Advanced Social Sciences (CASS), he did not produce any research report throughout his tenure at CASS. This was dismissed and our Comrade was given the benefit of the doubt. Twelve years after, his research competence is well outlined and his response is an authoritative confirmation.

I make no claims to anything when I was in NLC. I left as Senior Assistant General Secretary and was told if I wait I will be promoted to Deputy General Secretary. That was in October 2006. While in NLC, I had the rare privilege of serving as Acting General Secretary. I left behind programmes and resources. Although, since I was “not really anybody of consequence”, I will argue that whatever anyone in NLC will say about my person today, there is a standard and I challenge Dr. Ozo-Eson to dispute that.

The NLC that we were all attracted to serve was NLC driven by knowledge, openness and democratic debate. It was an organisation with a world of difference. It was an organisation that nurtures the young ones and challenges all functionaries to develop their competence and capacity. This is completely missing in the NLC of today as a result of which its moral authority is weak. The decay in government and society is finding higher levels of expression in our unions and NLC today. On account of which, a top NLC functionary, converted from being part-time President of his union to full-time General Secretary, just so as to continue to remain as NLC official. Another one has recently postponed the conference of his union just so that perhaps hopefully by the next conference of NLC he can return as possibly President.

There is no need to criticise PDP, government or any employer if at the end of the day we have lost our moral credentials. Let no one deceive Nigerian workers about services if the reference point is the same repressive and authoritarian orientation. The truth is that if Comrade Omar and all our leaders in NLC are unable to lead based on the tradition NLC is known for, I have every responsibility as a Nigerian and as someone who has served the movement to be critical so that they can retrace their steps. I have no apology for that. It will be unfortunate if Dr. Ozo-Eson will collapse and join the crowd of cheer leaders at this late hour.

Finally, what is the issue about consulting for Governors? Doesn’t consulting for Governors also imply consulting for Comrade Adams? Yes, I have consulted for Governors and till today, I can happily say that I enjoy the recognition of some of our Governors. It is a relationship that is value driven based on purely my ability to be relevant to the process of strengthening the capacity of governors to deliver services. It is a privilege and I can only continue to enjoy it with good intellectual services. I have no doubt that the day I fall short of their expectations, all relationship shall end. It is true, it is a choice but it is a choice with subsidiary powers unlike the relationship between many of our leaders in NLC on the one hand and government and employers on the other. I will argue that with our relationship with governors, we may be closer to workers than many of our functionaries in NLC and the unions. Calling me names will not change that reality!

(Lukman can be reached on: smlukman@gmail.com)


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