Here we go again!
Minister of Labour and Employment, Senator Chris Ngige, who has in the past threatened to sanction private sector banks that sacked their staff is assuring Nigerian workers of a pay rise next year.
Ngige stated this in Awka, the Anambra State capital in an interactive session with journalists on Tuesday.
According to the Minister, “The Nigerian workers are entitled to a review of their pay under the constitution of the Federal Republic of Nigeria. The various committees handling this matter are all working hard to realise the objective. Some are at the final stages of their work.”
Ngige added that the minimum wage being worked out by the Buhari administration, would be enforceable by workers in both private and public sectors and any employer of Labour in the country who would pay his workers below the minimum wage would be held liable.
It seems unclear to us why a labour Minister who has presided over a 13.3 % unemployment rate and the addition of 4.6 million Nigerians to the unemployment rolls since President Buhari’s election in May 2015, would be proposing more private sector job killing and economically damaging schemes.
In case the Minister’s memory is short we would like to remind him that in 2010 the government borrowed to pay an unprecedented 53.7 percent wage increase to all categories of federal employees as demanded by labour unions.
The total wage bill in turn rose from N857 billion in 2009 to about N1.4 trillion in 2010, and as a result, domestic borrowing increased from N200 billion in 2007 to about N1.1 trillion in 2010 to meet the wage payments.
The increase in the minimum wage also led to the recurrent expenditure vs. capital expenditure Federal Government budget breakdown hitting the 80: 20 mark and undermining any effort to provide infrastructure for Nigerians.
Compounding issues is the fact that oil prices and production were higher in 2011 than they are now, while the economy was expanding at near 6 percent which meant the capacity of the government to borrow was much higher then.
The minimum wage hike of 2010 also sowed the seeds that have led to the inability of most Nigerian states and local governments to pay worker salaries today, with several owing salary and Pension arrears running into many months.
We would like to remind the good intentioned Minister Ngige that with inflation at 18.33 percent, a balance of payments crises that has led to dollar shortages which in turn has led to shortages of goods in Nigeria, and hints of the Central bank of Nigeria (CBN) monetising our national debt with unauthorised transfers/loans to the FG leading to a spike in money supply, any hike in wages is likely to lead to higher inflation as more and more naira’s chase fewer and fewer goods.
Additionally we suggest that any attempt to force the new minimum wage on private sector employers will only lead to more workers being retrenched as firms are usually in survival mode during a recession by staying lean and cutting costs as they prepare for the rebound in growth and would be unwilling to absorb any new labour costs until there are signs that the economy is picking up.
While this is common knowledge in the Private Sector it is probably difficult for a public sector employee like the Minister of Labour and Employment to comprehend that his ill-timed Minimum Wage proposal will lead the Nigerian worker and economy straight to hell via more unemployment and Inflation even as the country’s misery index (Unemployment + Inflation) is currently at an unprecedented 31.63%.