Friday, 29 May 2015

Article: Labour Challenges Facing APC Governments


By Salihu Moh. Lukman (smlukman@gmail.com)

2015 Elections and Campaign Promises
During the 2015 electioneering campaigns, the All Progressives Congress (APC) pledged to “create 3 million new jobs a year through public works programmes and shifting the economy towards value-added production” as the primary economic targets of governments produced by the party. The APC is today victorious having won the presidency and 22 states. No doubt, the challenge facing the party is how it will deliver on all campaign promises, which include the creation of 3 million jobs annually.

Beyond winning the 2015 elections, the APC has, in fundamental ways, responded to the demands by Nigerians for parties and politicians to make clear commitments. Today, there is no doubt that APC unambiguously commit itself to issues that are well outlined in the provisions of the party’s manifesto. In addition to commitments contained in themanifesto, President Mohammadu Buhari further committed himself to issues contained in My Covenant with Nigerians. Today, the details of the specific commitments of APC and President Buhari are not in doubt. One of such commitment is the provision of 3 million jobs to Nigerians annually.
 
Against the background of high unemployment rate of 23.9%, which translate to over 40 million unemployed Nigerians, creating 3 millionjobs annually will fundamentally address the challenge of unemployment in the country. The question is how can the APC create the 3 million jobs annually? President Muhammadu Buhari and the 22 APC State Governors would have to deliver on this particular campaign promise. Capacity of the APC governments, whether at federal or state levels to deliver will depend on the capability of the public service as aptly articulated by Mal. Nasir El-Rufai, APC Governor of KadunaState at the APC Policy Dialogue of May 20 – 21.
 
With the incontrovertible message that “No nation develops faster than the capability of its public service” Mal. El-Rufai submitted that Nigerian public service is “perceived as Dysfunctional, Inefficient, Corrupt, lacking Administrative capacity and incapable of attracting the best and brightest”. Some of the highlighted attributes include; too many workers (1 million – federal and between 2 – 3 million – States and Local Governments), aging (with average age of FG civil servant around 43), inadequately educated, expensive, outdated,poor pay and high ghost workers.
 
Repositioning Public Service – A Recurring Challenge
Certainly the commitment to create 3 million jobs annually is not just about employing public sector workers but more about how to reposition the sector to serve as very effective stimulant that would lead to the creation of economic opportunities in all sectors of the nation’s economy. Looking at the attributes of the Nigerian public sector, it will be almost impossible to formulate any roadmap without considering issues of size and budgetary implications. Interestingly, these are issues that are as old as the sector and for us in Nigeria, attempts to respond to these issues based on the challenges of size and budgets has produced reform commissions and panels appointed almost by every administration since independence.
 
Commission/Panel
Year
Outcome
Morgan Commission
1963
Revised salaries and wages of junior workers in FG
Eldwood Commission
1966
Investigated anomalies in grading and other conditions in public service
Adebo Commission
1971
Reviewed wages and salaries at all levels in the public service, statutory corporations state-owned companies.
Udoji Commission
1972
Reviewed and overhaul the entire public service to ensure development and optimum utilization of manpower for efficiency and effectiveness.
Dotun Phillips Commission
1985
Reviewed the structure, composition and methods of operation to cope with demands of government in the 1980s and beyond.
Civil Service Reform Decree No. 43
1988
Recognized politicization of the upper echelons of civil service, merged ministerial responsibilities and administrative controls, recognized ministers as chief executives and accounting officers, replaced permanent secretaries with director-generals, etc.
Ayida Review Panel
1994
Re-examined 1988 reforms and reversed most of them.
Civil Service Reform
1999 – 2007
Expunged extant rules, procedures and regulations that frustrate effective service delivery based on market driven philosophy. This produced pension reform, monetization policy, restructuring of pilot MDAs, downsizing and payroll reform, and review and update public service rules and financial regulations.
Steven Orosaye
2010 - 2012
Reviewed organizational structure of the service in line with the 1999 – 2007 reform. Specifically recommended reducing 541 MDAs to 163.
 
Most of the reforms are accompanied with staff rationalization exercises especially since the 1980s affecting thousands ofpublic sector workers. While the desirability of each reform could not be disputed, the mandates are very similar and recommendations virtually repetitive. The common issues being costs and organizational structure. Today’s public service challenges are virtually the same with those attended to since Dotun Phillips’ Commission of 1985. With minor alterations therefore provisions of previous reports could be adopted to address today’s public service problems. The danger being that few years from now, we will return to the same issues again.
 
In some ways recurring arguments always produced arising from the works of reform panels and commissions is reduced to size and capacity developments. It resurfaces with almost every economic downturn. To that extend virtually all previous reform panels or commissions have size of the publicservice as part of their terms of reference.
 
Perhaps, we may wish to check; is there international standard to the size of a nation’s civil service? Could the size of the civil service in US, Germany, France, UK, Brazil and South Africa for instance serve as any reference point? US, with population of 325 million is said to have 2.123 million workers in its federal service. Germany with 82 million has 698 thousand, UK with 63 million has 2.182 million, France with 66 million has 2.441 million, Brazil with 203 million has 883 thousand workers and South Africa with 53 million people has 466 thousand workers. Looking at the public service profiles of these countries, it is difficult to make reference to any standard with respect to size.
 
What is very clear from the records of these countries is that the size of the civil service is not the issue. What is an issue is the capabilities and effectiveness of the service in meeting national needs. Unlike Nigerian public service that is adjudged “Dysfunctional, Inefficient, Corrupt, lacking Administrative capacity and incapable of attracting the best and brightest”, public service in these countries are “functional, efficient, transparent, with Administrative capacity and capable of attracting the best and brightest”. That may perhaps be the only strong reason why Brazil with over 200 million population could have less than 1 million workers in its federal service, while UK and France with just around 60 million population could have over 2 million federal civil servants. Yet, Germany with 82 million could have much less than 1 million workers. Similarly, South Africa with 53 million people has less than half a million federal workforce.
 
Failure of Previous Reforms – Ideological Factors
It would appear that we need to focus the challenge ofaddressing problems of our public service more in terms of why implementation of previous reforms have failed rather than simply re-introducing the same old principles that influenced old reforms. In doing so, two issues need to be recognized. The first is that since the 1980s, public service reforms were part of demands by multilateral financial institutions such as the World Bank and IMF. Ideological orientations of those demands led to the demobilization ofpublic organizations such as railways and aviation. In addition, it has led to the privatization or monetization of public service functions such as cleaners, drivers, gardeners, etc. This has created its own problem, one of which is that it may not have achieved the result of reduced public financial burden.
 
Influenced largely by right-wing ideological postulations of reduced size of government, many services were sub-contracted to so-called private operators, no thanks to the recommendations of public service reform panels and commissions. In so many ways, the results of sub-contracting public service activities escalated incidences of corruption in Nigeria and make it assume the current monstrous proportion. A typical example is the importation of refined petroleum products in the country. On account of allowing private operators in the name of major and independent oil marketers to handle the business of importing refined products, the nation today is confronted with subsidy bills running into trillions of Naira annually. Addressing these issues can hardly produce desired expected result of affordable service delivery with reference to personnel cost.
 
The second issue is the need for consideration of all perspectives. In therefore attempting to formulate public service roadmap for the President Buhari administration, it is important that President Buhari and our Governors go beyond ideological preferences. The temptation could be high that we go back to old mindsets and end up emphasizing old initiatives. We need to support President Buhari, all our APC Governors and the teams around them to approach these issues beyond mindsets. In any case, some states that are essentially civil service oriented would have very little options if the dominant conclusion is to reduce the size of the public service.
 
The political risks would be high both in short and long runs. We may even chose to ignore such political risks and damn the consequences and based on claimed patriotic convictions of doing what may be adjudged right given our ideological choices proceed to carry out rationalization measures. Thiswill cause distractions and create avoidable tense industrial relations atmosphere. Again ideological preferences may blindfold our public officials into believing that tense atmosphere will be temporary and therefore not serious factors for consideration.
 
Be that as it may, it is important to emphasize that initiatives leading to rationalization of public workers will lead to predictable responses of hostility between government and organized labour resulting in strikes and work stoppages. The bigger challenge of ensuring that the country is placed on the path of national development driven by efficient and capable public service will be suspended. The main preoccupation of government will be limited to that of overpowering and subduing public sector workers and their unions.
 
Often strong ideological convictions could lead us to downplaying the negative consequences of any potentially hostile atmosphere. Given the challenges that the President Buhari administration will be confronting, it is important that the choice of who the government fight and when is made very carefully. This is not however to reduce governments to willy-nilly accommodate labour and just continue business as usual. Especially with the challenge of fighting corruption President Buhari’s government, at this early stage of its life should be very interested in making correct judgements of who the victims of bad governance over the years are. It could be debated but workers would certainly fall among the victims.
 
In any case, if a service characterized as aging, inadequately educated, expensive, outdated and poorly paid, reducing the size without taking specific actions to address these attributes would only further magnify the problem. Whichever way, there is hardly any easy option. More importantly however, should the current problems of the service persist, APC should just be ready to resoundingly fail in its promise of creating 3 million jobs annually. Our approach therefore should be to marshal support for the President Buhari administration to be able to succeed in all its campaign promises. With respect to the creation of 3 million jobs as a primary requirement for developing the capacity of the nation’s public service to stimulate economic activities and create diverse opportunities to facilitate producing the 3 million jobs should be the overarching goal of public service reform under the President Buhari administration.
 
Size and Cost Prejudices
It can hardly be disputed that workers in our public service are ageing, inadequately educated, outdated with ghost workers accounting for between 15 – 25%. The argument that it is too large and expensive needs to be verified beyond ideological biases. It doesn’t make sense to simply handover services to private operators in the name of reducing size and personnel costs, which only end up moving cost from personnel to other sub-heads in public accounts. With proper audit, it is likely to be found that this could have actually resulted in increased cost.
 
With estimated workforce of 1 million in FG and between 2 – 3 in states and local governments, is our public service really large? If it is, what will be the recommended size of our public service given a population of 170 million citizens and 92 million workforce? With a commitment to create 3 million jobs annually, is reducing the size of our public service necessary for APC governments to be able to deliver on all campaign promises? How will reduced size of the public service change the facts of its ageing, inadequately educated, outdated with high ghost workers? Is the size of the public service positively correlated with age of the workers, education, etc.? While it istrue that the size of the service is positively correlated with cost, is personnel cost as reflected in our public accounts really the problem?
 
Take 2013 for instance, the Central Bank of Nigeria (CBN) annual report for that year, indicated that personnel cost of federal, states and local governments was N3.589 trillion against total public expenditure of the three tiers government of N11.103 trillion. Personnel cost therefore represented 32% of total public expenditures of the three tiers of government. For federal government, personnel cost was reported by the CBN in 2013 to be N1.721 trillion with total federal public expenditure being N5.185 trillionrepresenting 33%.
 
Personnel cost of slightly above 30% would appear to be healthy although definitely hardly productive especially with reference to endemic lack of capacity. The big issue is that beyond the nominal value ofpublic personnel cost is the high levels of corruption associated with the service, which has produced very high recurrent public expenditures. Often when references are made to the service being expensive, high corruption associated with the service is the issue. The challenge of transforming the service to be productive, efficient and less wasteful is centrally about fighting corruption in the service. Any discussion of reforming the service without successfully fighting corruption will be defeatist.
 
Could there be any form of correlation between size and corruption? Perhaps yes given the stubborn prevalence of phenomenon of ghost workers. Estimated at between 15 – 25% of workers in the service, fighting corruption should include tight measures to eliminate ghost workers, which in itself would reduce personnel cost. As part of the fight against corruptionunder the young Buhari administration, the issue of ghost workers should begiven high priority.
 
High Public Expenditure Embed Corruption
National reality of financial recklessness fuelled more by the federal government under the PDP defines the Nigerian economy. Allegations of mismanagement and corruption against public functionaries have become frequent and reduced to public noise without any consequence. For instance, in 2012, following the January national protest against increases in the prices of petroleum products, there were allegations of oil subsidy fraud, with the House of Representative eventually setting up the Hon. Farouk Lawal Ad-hoc Committee to verify the actual subsidy requirements of the country.
 
At the end of the investigation, the Committee reported that “contrary to official figure of subsidy payment of N1.3 Trillion, the Accountant-General of the Federation put forward a figure of N1.6 Trillion, the CBN N1.7 Trillion, while the Committee established subsidy payment of N2.587 Trillion as at December 2011, amounting to more than 900% over the appropriated sum of N245 Billion. This figure ofN2.587 Trillion is based on the CBN figure of N844.944 billion paid to NNPC, in addition to another figure of N847.942 billion reflected as withdrawals by NNPC from the excess crude naira account, as well as the sum of N894.201 billionpaid as subsidy to Marketers. The figure of N847.942 billion quoted above strongly suggests that NNPC might have been withdrawing from two sources especially when double withdrawals were also reflected both in 2009 and 2010.”
 
The report of the 2012 subsidy probe threw up issues of accountability especially by NNPC with the strong charge that “NNPC feasted on the Federation Account to bloat the subsidy payable, some of themarketers were involved in claiming subsidy on products not supplied.” In particular, the report also indicted the Accountant-General of the Federation that served in 2009 for making payments in equal installments ofN999 Million for 128 times, totaling N127.872 billion.
 
Following the release of the House of Representatives subsidy investigation report, the Chairman of the Ad-hoc Committee, Hon. Farouk Lawal enmeshed himself in $3 million bribe scandal reportedly demanded from Mr. Femi Otedola, a major oil marketer, to clear him from allegations of subsidy fraud.
 
Since the House of Representatives subsidy investigation, the nation has continued to witness claims and counter claims of missing oil revenue. In October 2013 for instance, former CBN Governor, Mallam Sanusi Lamido Sanusi alleged that $49.8 billion from the sales of crude oil between January 2012 – July 2013 was missing from NNPC accounts. Following series of audits and reconciliation meetings involving NNPC, CBN and Ministry of Finance, the former CBN Governor reported the missing amount to be $20 billion while the former Minister of Finance, Mrs. Ngozi Okonjo-Iweala reported $10.8 billion. On February 20, 2014, former President Goodluck Jonathan suspended Mallam Sanusi from office on charges of financial misconduct.
 
Although with the suspension of Mallam Sanusi, allegations of missing oil revenue from NNPC accounts took backseat, the recently released report of the PricewaterhouseCoopers (PwC) confirmed about $20 billion as the missing amount. In addition to missing $20 billion, the PwC audit report revealed that NNPC expended $1.5 billion as personnel cost over a period ofabout 15 months. This highlights the fact that any public service reform must address the cost of running our parastatals.
 
Throughout the tenure of the Jonathan administration (2010 – 2015), public flashes of allegations of corruption against public officers continued. In 2012, there was the case of Police Pension Task Force resulting in Senate investigation. Some of the revelations include withdrawal of N24 billion for payment of pension that required about N3.5 billion. The Chairman of the Pension Review Task Team, Alh. Abdulrasheed Maina, informed the Senate Committee of two accounts in Lagos where police pension funds was lodged, each amounting to N21 and N24 billion. Alh. Maina reported daily withdrawals of various sums of money from these accounts ranging from N200 to N300 million. Total sum of N273.9 billion was reported by the Senate Committee to have been looted in 6 years.
 
Other flashes of corruption charges against public officials include the recurring case of $180 million Halliburton; $1.1 billion MalabuOil; Princess Stella Oduak N255 million Aviation Ministry bulletproof cars; N10 billion jet scam involving the Petroleum Minister, Mrs. Dizieni Alison Madueke; House of Representatives Capital Market probe; N360 billion service wide scam; and the recent Soludo’s allegation of missing N30 trillion.
 
What these suggest is that substantial component of public expenditure services shady activities of public officers and their collaborators. Unfortunately, inconclusive investigations both cover the size of the proportion of public expenditure that is lost to corruption and as well as encourages and entrenches the incidence of corruption in our national life.
 
Politics – Corruption Drive High Public Expenditure
On Saturday, December 20, 2014, the Peoples Democratic Party (PDP) organized fund raising dinner and generated whooping N21 billion ostensibly for former President Goodluck Jonathan 2015 re-elections. Although owing topublic criticisms, and of course legal implications, the PDP subsequently argued that the fund raising dinner was not to support former President Jonathan’s re-election campaign, the question needs to be asked; why this generous support coming from virtually all the leading sectors of the Nigerian economy? Do altruistically ideological or business investment considerations or both inform these contributions? If the consideration is altruistically ideological, what does that mean? If business investment decision, what are the expected returns? Whatever the objective, good enough, both the PDP and former President Jonathan have lost the elections.
 
Underpinning this extravagant donations was certainly the expectations to access business opportunities by way of contracts and consultancies to the magnitude of these contributions. Ethical and legal considerations were hardly regarded and this may have accounted for situations where federal government makes subsidy payments for fuel products that are never supplied. It also accounted for why N24 billion payment will be made for pension that required just about N3.5 billion and daily withdrawals of N200 to N300 million can be made from pension accounts without any internal audit system reporting it. Total payments of N127.872 billion in equal installments of N999 Million for 128 times can be audaciously made without any query. And with Accountant-General, NNPC, CBN and Ministry of Finance having differentpublic account returns, everything goes!
 
If all these have happened, how can anyone then dismiss the APC Presidential Campaign allegation of former President Jonathan awarding contract of N24 billion to a car wash company surreptitiously for railway rehabilitation? With probes only producing archival materials in the names of reports, the beneficiaries have so far been brazen and could publicly announce donations for election campaigns of billions even when the law clearly limits it to N1 million per individual. These beneficiaries would do everything possible to recruit new partners from the ranks of APC appointed public officials, which could well include incoming public officials of the President Buhari administration.
 
Politics Entrench Corruption in Public Service
Certainly, high political investments produce entrenched interests. With the defeat of PDP and the emergence of APC controlled federal government, it should not be assumed that the culture of pervasive corruption in our public service will have gone with PDP. The truth is that it is verymuch around. Ministers and other political appointees to be appointed by President Buhari will assume office with the hope of enjoying some pecuniary benefits. Members of the National Assembly who have spent extravagantly to be electedwill be assuming office with the hope of recouping their investments. The question is, what will be the new safeguard to protect public funds under the management of these public officials? Put differently, what initiative willPresident Buhari introduce to inject new culture and new orientation among our public service officials?
 
Perhaps, again for the purpose of analysis, it can be assumed that many of the new emerging public officials will be resuming office with very little options. They will need accommodation and other essentials, which monetization assumed not to be the responsibility of government. The reality is, unless there are proactive safeguards, the process of orientating these public officials will naturally pull them along the old dirty corruptpaths, thereby stunting the capacity of the President Buhari’s administration to bring about the change Nigerians desire.
 
To therefore approach public service reform based on the old mindset of reducing cost and size through simply staff rationalization measures will be chasing shadows. It is true that workers could be part of the problem but without putting in place a good plan that can respond to the expectations of politicians and make them operate strictly within predictable service limits with projected accountable rational costs, reform will only go through cycles of failures and re-enforce the problem.
 
New Public Service Orientation as Foundation for Change
Public service reform of the President Buhari’s administration must include new orientation as the foundation for delivering the change Nigerians are yearning for. A holistic approach that goes beyondnumber of workers and payroll will be required. Issues of output will have to be addressed. As it is today, output is marginal and perhaps a derived focus of reform.
 
The process of transforming service to be output driven will necessarily require attention to education of the workforce and modernization. Its success will be contingent on how strongly the reform is integrated to the revival of our educational system. The truth is that a nations public service is as good as the quality of products from its educational system.
 
While it will take some years for the reform of our educational system to make good impact on quality of our public service, for reform to produce new service orientation need to commence with the immediate short term targets that includes appointing not just competent institutional drivers such as ministers and heads of MDAs but also persons that are capable of demonstrating transparent and accountable public life. The starting point is for President Buhari to develop additional byelaws and ground rules that further subject appointed public officials to public scrutiny.
 
This will profoundly serve as the moral driver for deeper public service reform including the issue of eliminating ghost workers and the fight against corruption. Once the reform is broadly informed and not narrowed to the application of biases and mindsets, it will be far more effective toprosecute the fight against ghost workers and corruption and where the challenge required a focus against corrupt unionized workers and union leaders who may attempt to mobilize against government in order to shield culprits will be possible and easily achieved.
 
Factoring Other Labour Challenges
With or without reform, President Buhari’s administration will be inheriting a lot of outstanding labour inputs and perhaps strikes. Even without initiating reform, the administration is assuming office against the background of very hostile atmosphere. Unfortunately, institutional mechanisms for addressing labour disputes are as dysfunctional and ineffective as the service itself. The capacity of the Ministry of Labour, which under the law has the mandate to promote constructive labour relations and foster productive workplace relationship in Nigeria, is weak. Extant statutory provisions such as provisions under the Trade Disputes Act, to the extent of recurring strikes and work stoppages, highlight sharp capacity challenges.
 
One of the critical issues that President Buhari need to urgently attend to as part of the short term challenges of public reform programme of the young administration will be to urgently reposition Ministry of Labour with the objective of managing all disputes and apply provisions of the Trade Disputes Act proactively to arrest all potential disputes and ensure that they don’t result in strikes. As part of the immediate response mechanism, President Buhari may wish to consider appointing a Specialist Technical Adviser on Labour Matters to work with relevant staff of Ministry of Labour to undertake quick industrial relations audit of agreements with unions in the public sector and constitute a task team to attend and negotiate all outstanding labour matters with unions.
 
In order to succeed in this respect, the regime would need to commit itself to developing good relations with unions and other non-state actors. Good relations with union and non-state actors will be important at two levels. The first will be on the issue of fighting corruption, which will require effective whistleblowing capability. Unions and non-state actors can best provide this support to the government’s quest to fight corruption.
 
The second is with respect to other macro-level engagements especially aimed at broadening the scope of citizens’ participation in governance. Inputs to government policy and facilitating emergence of negotiable frameworks to engender cooperation and collaboration to produce desired outcomes can be initiated. This will be needed against the background of APC’s commitment of creating 3 million jobs annually.
 
There is also the issue of strengthening regulations and ensuring that service conditions applicable to operations and conducts of private employers conform to all statutory provisions as provided by our nation’s extant rules. Due to weak regulations, private operators function with impunity and in some cases, for instance some foreign players; unskilled jobs, which could have been employed by Nigerians, are imported. A typical example is the case of a local airline employing foreigners as cabin crew. These and other issues related with violation of our laws by private players resulting in the incidences of unfair labour practices in the country could be part of the terms of reference of labour task team under the supervision of a Presidential Technical Adviser.
 
In the end, President Buhari’s administration needs to approach the issue of public service reform based on strategy of addition, rather than subtraction. The goal should be to humanize the nation’s public service through combined effort to harness the capacity of our public service workers to make them effective and efficient. The intended outcome should be to make Nigerian public service “functional, efficient, transparent, with Administrative capacity and capable of attracting the best and brightest”.

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