When politicians fixed their salaries and emoluments and decided to pay themselves humongous amounts, no hell was let loose. When the government decided to buy imported SUVs for billions of dollars for legislators and executive members, there was no negotiation but direct approval and purchase. Now, the time to pay workers, including those who will make the efforts of the politicians bear fruits, there are foot-dragging, hustling and jostling, arguments back and forth. There is no justification for a long discussion. Let Labour be paid living, not existence wages.
In any case, unlike most politicians who convert an excess proportion of their emoluments into foreign currencies or purchase exotic goods, these workers will spend the money in the same Nigerian market. Such an action propels increased production from rising demand for goods and services. Even the private sector which is the beneficiary of improved salaries is kicking against paying workers good salaries. I listened to a discussion where even members of the public were arguing that the government or the economy could not afford N100,000. Nigerian workers are among the few least paid on the African continent! That is part of the determinant of poverty indices that ranked the country among poverty-stricken economies. With the current cost of living, N100,000 is sustenance, not a living wage.
And I ask, in the last 12 months or even the last four years when the last minimum wage was fixed, by how much have prices jumped, or by how much have workers’ values been devalued through government policies? The government blew up the size of governance when it should have been reduced. The government pampered the legislature with all sorts of huge allowances including Christmas/New Year break largess. How can such a government now claim that there is no money to pay living wages to workers whose productivity is expected to drive outputs and expand the economy?
There have been arguments that some states could not even pay the N18,000 minimum wage when others were paying N30,000. So how would those states pay N100,000 minimum? Others have argued that paying up to N100,000 will lead to inflation, unemployment and economic recession. Was it true that some states could not pay N30,000 even when their allocations doubled in the last 12 months or they just refused to pay wages and used the ensuing poverty as a weapon of submission? The same states paid the fraudulent monthly security votes to governors without default. Has inflation stopped without an increase in salaries all these years? If a salary increase is going to drive prices higher, it will be short-term.
Some studies have shown that a sudden increase in minimum wage could result in two negative outcomes that are short-term in nature. First, prices will rise initially and secondly, labour disengagement will follow. That is, inflation will be followed by unemployment. But there will be a turnaround by the second quarter of the implementation when the new wages start circulating in the economy. The increased demand that propelled the initial price increase will result in producers trying to meet up by increasing their quantity which improves capacity utilisation in the industries.
This invariably causes labour-intensive industries to hire more labour to meet up with the rising demand for goods and services. The employers will demand higher productivity from Labour and well-paid Labour will ignore moonlighting (alternative business) to concentrate on the primary job or risk losing their jobs. The ensuing rise in productivity in virtually all the sectors of the economy will result in higher GDP, innovation and technological advancement. So the medium to long-term effects of productive or living wages far outweigh the short-term loss.
The present predicament of the economy is partly due to inappropriate wages paid to workers at all levels. Having worked directly in two different establishments with different ownership structures, I am in a good position to explain the influence of salaries on workers’ commitments to their assignments. I taught in a public university (or universities) where the salaries are very low and academic staff members augment salaries by teaching as adjunct staff in private universities, aside from some that engage in the exploitation of students who also exploit their parents through various means.
The commitment to work by staff in these universities is quite low, whereas the same staff member shows more commitment in the private university, his/her secondary job, since the salary could be as much as what is earned in a full-time job. The staff member could miss classes at the university that employed him full-time to be able to teach at the adjunct place. Productivity is higher at the adjunct place of work than at the main institution. That is the nature of inappropriate payment. It takes a good conscience to give the same quality teaching at the two places of work.
Paying appropriate salaries also gives the employer the wherewithal to demand quality service from the workers. There is what is called “efficient wage” in economics. In the Generic Efficiency Wage models, the rationale for higher wages includes the fact that such wages increase workers’ food consumption and consequently become better nourished and more productive. It provides incentives for workers to perform with less supervision, particularly if the wage is above the market clearing rate. It wakes up innate ability in workers i.e. raising the average ability of the workers and building loyalty among workers as well as inducing higher efforts. Low wages, on the other hand, can cause anger and desire for revenge such as sabotage or shirking of duty.
Practical examples abound. When I placed my driver on an N18,000 minimum wage, anytime he was sent on an errand, he never returned excess money, even when asked. When the minimum wage was increased to N30,000, I decided to pay him N40,000 because I was also better off, and he just got married. I found him more dedicated to his job; resuming very early, more cheerful and returning any excess money when sent on errands. I asked my son, his age-mate, to interview him on the change of attitude. He confessed he would not want to lose his job because he was receiving a good salary. That is the kind of result that follows an appropriate labour salary.
It is the tradition that workers’ salaries in a democratic setting must go through negotiations with the Labour unions setting the ball rolling, usually by bringing up an expectedly high amount for negotiations. So when the Labour unions came up with the initial N615,000 minimum wage, only those familiar with the trade union antics (the awos) knew it was a good starting point, and inexperienced government representatives could get confused and settle for half that asking price. The uninitiated were condemning the unions for demanding such a huge amount in an “impoverished economy.” The Nigerian economy is not impoverished but suffers from greed, selfishness and unbridled corruption in the hands of the elite.
The Labour unions can bring to the negotiating table an example of a breakdown of the monthly expenses of a typical young Nigerian household to be used to determine the minimum wage. Such a household of three to four individuals could consist of a husband, wife and a child or two. If we add accommodation, feeding, and transportation with healthcare expenses which are basic needs, given the current prices, it would be clear that a N100,000 minimum wage would require subsidy from an additional source to make the family live moderately presently.
For the Nigerian economy to grow, we need productive labour, innovation and technological advancement. Economic theory tells us that the productivity of other factors of production (capital and land) depends on labour productivity. Karl Marx had warned that the contributions of labour should not be underestimated and Romar, Lucas and other economists of the capitalist mode have confirmed Marx’s position in the endogenous growth theories.
The developing countries that are supposed to take care of labour through training and adequate remuneration are intolerant of meeting the needs of labour. A large proportion of labour remains unskilled, resulting in a low level of innovation and technological advancement. Why are skilled labour in Nigeria seeking better recognition and living conditions in other countries? The government must change its attitude towards labour services. No government can pay labour fully for its efforts but the need to pay productivity wages is essential for output to grow and the economy to move forward.
