Minimum wage struggle: Getting it wrong
- Rev. Fr. Uju Okeahialam
By Uju Okeahialam
This work posits that the manner of the minimum wage struggle in the country is wrong and will further impoverish those who may be getting that bump in their take-home pay. In the event of this, the nation does not benefit as well. This position is predicated on the elementary understanding of the minimum wage principle and the place of the Nigerian state in the labour field.
Primarily, the minimum wage is not the maximum wage. It is rather the least that can be offered to a starter to live with some levels of dignity after a spirited time spent working. From this level, the remuneration of workers continues to rise to the limit the employer can pay based on the value placed on that worker. The value determination can be based on that worker’s skill, qualification, or experience. For this, the minimum wage appears to target more unskilled workers or part-time workers, especially young people who want to make some money and gain some work discipline and experience while in school and more during their vacation.
This is why when you follow most developed nations’ economies, they tend to show more job gains during holidays when these added hands are more available. Further attention to these economies also shows more aggregated gains because, with more money in the hands of more people, there are more gains in the retail outlets — ultimately filtering through the chains from production to consumption. However, it must not be forgotten that minimum wages in every society are starting wages not capping wages that every employer of labour in that society upholds.
In Nigeria, the government is the highest employer of labour and it will not be wrong to say that (the same) government and its agencies employ about 70% of the working force in the country. This working force must be acknowledged as less than 20% of the national population. Less than a quarter of the remaining 80% work outside government services. The implication is that the load borne by the working few (in and outside government) is significantly high. It is based on this that the manner of minimum wage agitation and resolution is considered wrong in the macro-economic frame.
It is wrong because it puts more money in the hands of a few without improving production. This will amount to more money chasing fewer goods which elementary economics calls inflation — something not considered a sound economic plane for a nation to inhabit. With the jacked-up cost of things, the few workers will have their plates fuller of requests and attention to the emptying of what is said to be gained in the jacked-up wages. In this scenario, the supposed new wages do not accomplish a thing. The recipient cannot build a new house, buy a new car, or pay for something beyond the necessities—if they are even able to fund it. They will be saddled with meeting the new costs for themselves and those who depend on them before and after the resolution of the face-off.
Although some will consider this view as insensitive to the plight of the workers; I say not really. The working population in Nigeria is quite less vis-à-vis the population. Equally, the primary rule of minimum wage determination in a nation is a matter of legislation that all who employ labour in the country have to uphold. In the event of a ballooned minimum wage (not so much because it is much but in comparison to what was before) legislation, how will individual holdings, small businesses, and private corporations cope? The government receives the taxes, licenses, and other revenue sources that form their monthly stock of national cake sharing. Therefore, they can always raise the cost of these to meet any obligation agreed.
But how will the restaurateur, the taxi driver, the neighborhood clinic, the private school, the retail store, the farmer, etc. raise the resources to meet the new obligated cost to their workers? They will surely pass it on to everyone who comes for their services — the people, many of who did not get that raise. Wherever in the world such arbitrary wage raises are passed down, some businesses and services fail the fittest survival test. This is because there is no denying that every business outlet will want their haul from those blessed with government largesse. Unfortunately, not all got it and not all can afford the new demands.
Sadly, this is part of the gains (curses) of corruption. Standard economies have systems of upward mobility with every worker hopeful to reach the peak of their careers as long as they continue to serve with diligence and succeed in every sorting mechanism on the way to the top. On this ladder, they know when their promotions and retirements are due. But not so in Nigeria. Some workers manipulate their ages, bribe their way to hold on to their positions thereby depriving those under them of getting to the peaks. All these happen because there is no (social security) safety net to take care of them in the evening of their lives. They also happen because of a corrupt political class that wants to have their backs guarded by those they have chosen—and do not care about the sacred desire of the others to get to their peaks so long as their backs are watched by their trusted allies.
In the prevailing environment, the minimum wage agitation will continue because a majority sees a minority appropriating for themselves the commonwealth of all. In the prevailing circumstance, corrupt and intimidated labour leaders will always cave in after some hold-outs because the corrupt political class has succeeded in smearing other arms of government and several sectors of the citizenry into acquiescence. In the prevailing circumstance, the impoverished populace is switched on into survival mode thereby ready and willing to accept anything and everything to hang on to life.
While the agitation holds, these political class, their families, friends, and acolytes are not losing a thing. By the time the holdout is loosened, the people would wake up to realize how much mileage they have lost in all the indices of life and social mobility. If they can win some wage padding in the process, they soon realize when everything is aggregated that they are more impoverished. The larger society will also wake up to realize that they were coping better with the old dispensation. As a result, the idea of getting back to the trenches boils even as the dust of the older one is trying to settle.
Is this the route for sustainable national development? Maybe not. Could it work to push the wages of all sectors of government and private holdings to the old minimum wage and let the law of service progression run its normal course? I do not know. From here can the economic planning council suggest the manner of adjustment to inflation for workers? This way the shock on the general economy will be greatly minimized and the people can breathe better. A renewed hope should be for better living and not for condemnation. A renewed hope should open the space so that work can be created in the private sector so that all who can work will find work.
- Uju Okeahialam, PhD, is a Catholic Priest based in Maryland, USA