There are strong indications that despite the fact that the N30,000 new minimum wage is signed into law, making it mandatory for all employers to comply with the new salary structure, some states in the country may not be able to pay the salary threshold.
Investigations show that at the moment, states’ allocations from the Federation Account have been a staggering issue and their Internally Generated Revenue (IGR) cannot settle their huge salary wage bills.
This situation is worsened by high accumulated debt and unpaid loans. Figures obtained from the NBS show that since June 2019, states’ allocations from the federation account have not been very stable.
In June, the 36 states got N201.15bn; for July, it declined to N190.38bn and further declined to N188.925 bn in August and then to N186.816bn in September. In October however, allocations came up to N702.058bn; November got N635.826bn and for the month of December, it was N812.76bn.
Investigations further show that besides a noticeable rise in the federal allocation in the last few months, there are several deductions being made from allocations to states to service the bailouts and other loan repayment.
It was gathered that N162million is being deducted monthly from 35 states’ allocations for the N614bn bailout. It is said that there are other many deductions which are currently being done by the Office of the Accountant-General of the Federation.
It was further gathered that some of deductions include external debts, contractual obligations, national water rehabilitation projects, the National Agricultural Technology Support Programme, payment for fertilizer, state water supply project, state agricultural project and the national FADAMA project.
These deductions are done asides local and foreign debts which most of the states are grappling with repayment.
For instance, Edo State has $277.74m foreign debts; Cross River, $ 192 .73m; while Oyo is indebted to the tune of $ 136.53m. Delta State has N 233.56 bn local debts; Akwa Ibom, N206.41bn and Cross River is battling with N168.82bn debt, among many others.
New minimum wage as a law
President Muhammadu Buhari had signed into law the N30,000 Minimum Wage Repel and Enactment Act , 2019 upon which implementation of the payment took effect from Thursday, April 18, 2019.
The National Assembly had passed the minimum wage bill on March 19 and it was transmitted to Buhari on April 2, 2019.
The bill made it mandatory for employers of labour in both public and private organisations to pay N30,000 to employees.
The law mandates the National Salaries, Income and Wages Commission and the minister or labour to be the chief and principal enforcers of the provisions.
This means no state has the legality to refuse to implement the new salary threshold.
A former special assistant to the President on National Assembly matters (Senate), Senator Ita Enang, in an interview said the signing of the bill into law has “made it compulsory for all employers of labour in Nigeria to pay their workers the sum of N30,000.”
According to Enang, employers with less than 25 workers are excluded from paying the new wage.
He said workers of “a ship which sails out of the country and other persons who are in other kinds of regulated employment which are accepted by the act” are also excluded from the new wage.
“With the new law, workers now have the right to sue their employers who fail to pay them the new minimum wage and the act empowers the Minister for Labour or his representative to act in the case of such denial of the new wage.
“It also gives workers the right if you are compelled by any circumstance to accept salary that is less than N 30,000 to sue your employer to recover the balance.
“This law applies to all agencies, persons and bodies throughout the Federal Republic of Nigeria,” he explained.
IGR of states and monthly allocations
The analysis of the revenue profile of states and monthly allocations, according to records from the NBS, as at November 2019, indicated that a total IGR generated by the 36 states and the Federal Capital Territory (FCT) was estimated at N1.85tn in 18 months.
The net amount distributed to the states from the federation account was put at N3.76tn, implying that the amount which the states and the FCT got from the federation account during the period exceeded what was generated internally by them with about N1.91tn.
It indicates that only Lagos and Ogun States were able to raise their IGRs above the amount given to them by the FAAC.
According to NBS, Lagos received a total of N177.1bn from the federation account for the 18 months period. However, the state was able to realise about N 587.34 bn as IGR during the period. This brought the total revenue available to the state during the 18 months period to about N764 .45 bn.
For Ogun State, out of the total revenue of N172.26bn, about N114 .13bn was earned through the IGR, while the balance of N59.13bn was received from the federation account.
The analysis showed that Rivers State generated N188.75bn in the IGR. But Delta and Kano states earned N95.82bn and N62.66 bn respectively as IGR as against their respective FAAC allocations of N322.32bn and N124.97bn.
NBS stated that Kaduna generated N51.8bn as IGR and received an allocation of N101.21bn in the 18 months’ period, while Edo had N43.89bn as IGR as against FAAC allocation of N101.05bn. Oyo State generated N38.73 bn IGR but got N87.4 bn from the federal allocation .
Also, Enugu State generated N32.84 bn as the IGR during the 18 months period and received N78.11bn from FAAC; Akwa Ibom raised N44.66bn as IGR as against FAAC allocation of N288.65bn; Kwara had N39.13bn IGR as against FAAC allocation of N65.12 bn; while Ondo generated N43.78 bn as against N92.95 bn allocated to it by FAAC.
Similarly, Anambra State was able to generate N25. 37bn in 18 months but received N81.4 bn from the federation account; Imo had IGR of N25.43bn as against N81.01bn it got from FAAC; Abia raised N22.74 bn as against federal allocation of N 81 .93 bn; Bayelsa generated N19.5 bn IGR as against N218.85bn it got from FAAC; while Plateau generated N22.23 bn IGR compared to FAAC allocation of N65.24bn it received under the period under review.
Benue had IGR of N24.44bn as against FAAC allocation of N81.28bn; Sokoto generated IGR of N30.84 bn but got N81.26bn from FAAC; Kogi raised N18.01bn as IGR and received N78.34 bn from federal allocation, Niger got N19.55 bn as IGR and received N84.55bn from FAAC; Jigawa raised N14. 61bn IGR and got FAAC’s N88.86 bn; while Osun’s N20.59 bn IGR was a far cry from the N32.92 bn it got from the federation account.
About 10 states have concluded negotiations – NLC
Nigeria Labour Congress (NLC) has said about ten states have concluded negotiations with workers on consequential adjustments and are ready to implement the N30,000 national minimum wage.
Already, it was gathered that workers in Lagos and Kaduna, along with those at the Federal level, have started enjoying the new minimum wage.
The states, which have concluded discussions on consequential adjustments, according to NLC are Adamawa, Bauchi, Borno, Jigawa, Kaduna, Kano, Katsina, Kebbi, Lagos and Ebonyi. Just few days ago, Benue also announced that discussions on the adjustments have been concluded and the agrarian state is ready with payment. This brings the states to eleven.
NLC President, Ayuba Wabba, disclosed this when he appeared Channels Television’s ‘Sunrise Daily’ programme, recently. He said the ten states met the December 31, 2019 deadline set by organised labour.
“So far so good, we have about ten states that have concluded the process of collective bargaining and some have commenced payment. They are in three categories. First are the states that have respected the deadline (December 31). They are Adamawa, Bauchi, Borno, Jigawa, Kaduna, Kano, Katsina, Kebbi, Lagos and Ebonyi.
“We have those (states) that are still on the table and they have until yesterday (January 5) to complete the process. This constitutes about 23 states that are on the discussion table and we have seen commitments,” Waba had said.
Governors and their non-implementation body language
From their body language, it has become evidently clear that most of the Nigerian governors are not ready to implement the new minimum wage.
While it is only two states that have commenced payment of the new salary structure, about ten have so far only concluded negotiations on consequential adjustments with the varied organised labour unions. This indicates that about 23 states are yet to commence negotiations.
Thirty six governors under the auspices of Nigeria Governors’ Forum (NGF) had resolved that implementation of the N30,000 new minimum wage and the consequential increments be paid according to capacity of states.
This was the outcome of a meeting of the governors which was held at the Transcorp Hilton Hotel Abuja, end of last year.
By the resolve, it meant that any state that is able to pay the new minimum wage can do so and it also implies that states that cannot implement it would not be compelled to do so.
Chairman of the Nigeria Governors Forum (NGF) and Ekiti State governor, Kayode Fayemi told newsmen that the governors took the position based on the fact that states have different number of workers with varied trade unions.
“We members of the Nigeria Governors’ Forum (NGF), at our meeting today at Transcorp Hilton Hotel Abuja, deliberated on several issues.
“Governors reviewed current progress in the implementation of the Minimum Wage Law and resolved that consequential increments will depend on the capacity of each State government,” he had said.
To show that many governors are not ready to implement the new minimum wage, only about ten of them were able meet the December 31 deadline by NLC for conclusion of negotiations.
TUC gives governors January 31 to comply or risk strike
The Trade Union Congress (TUC) has given state governments that are yet to implement the N30, 000 new minimum wage up until January 31 to comply or risk industrial action from workers.
This was contained in a communiqué issued at the end of its National Executive Council meeting in Lagos, last Thursday. It was signed by the President, TUC, Quadri Olaleye and the Secretary General, Musa Lawal.
“The congress advises all state governments that have not complied with the implementation and immediate payment of the N30, 000 new national minimum wage to commence negotiations and implementation on or before 31st January, 2020.
“Otherwise the state governments should be responsible for the consequences of their failure. State councils have been directed to commence mobilisation of their members immediately,” it said.
Negotiations by governors unrealistic – analysts
An Abuja based social commentator, Ibrahim Manu has said the negotiations governors are going into with organised labour unions is mere political gimmick.
Manu, who is a former political office holder said there is nothing genuine and realistic about what the governors are doing on implementation of the N30,000 minimum wage.
“You can agree with me that since when this minimum wage came, about a year now, only two states have commenced payment in reality. And going by the position of NGF that states should pay according to capacity, no amount of negotiation will be real.
“They are simply playing politics with the issue. The governors do not have the interest of the civil servants at heart. I assure you that many of them, if not all, that are yet to conclude negotiations, will not meet the January 31 deadline issued to them by labour. They will continue to buy time till many of them will leave office. Even as it is a law for them to pay, they will still go against it more so that there is selectivity in the rule of law as it is currently the situation in the country.”
John Danjuma is the president of concerned retired civil servants (CRCS) who spoke to our correspondent in an interview.
According to him, it became hard for civil servants to depend on promises of governors whenever it involves issues of salaries and staff welfare.
“We don’t believe them again. Some of us are even retirees but we are concerned. Even the minimum wage, until they (governors) will implement it before we shall believe it. Everything revolves around politics these days. Politicians build bridges where there are no streams. But as it is matter of law, let’s wait and see if they will meet deadline issued by labour,” Danjuma stated.
States reacts
Some of the states that are yet to conclude negotiations on the consequential adjustments of the new minimum wage have said they will meet the January 31 deadline issued to them by labour.
In Taraba State, Governor Darius Ishaku pledged that negotiations between the state government and the organised Labour will be concluded before the deadline.
Ishaku through his senior special Assistant on media and publicity, Bala Dan Abu, said in an interview that the state government being workers friendly will demonstrate same leadership attribute in the minimum wage issue.
He lamented the poor financial disposition of the state and requested Taraba State workers should show consideration.
“Negations will be concluded before then. Gov Ishaku is workers friendly governor. He will demonstrate that same leadership attribute in this minimum wage issue.”
“But we request labour in Taraba State to show consideration for the poor financial disposition of the state by being less stiff on their demand”, he stated.
In Nasarawa State, Governor Abdullahi Sule has revealed that he has set up with a 23-man committee, currently looking into the issues for the implementation of the minimum wage.
According to him, government will not delay in it avowed commitment to improve the living condition of its workers.
Speaking to our correspondent in Lafia, Sule urged the committee to recommend to the government a workable template for the implementation. He assured the government will meet the deadline.
“This was in line with our determination to improve the welfare of public servants as they are the cornerstone for the implementation of government policies and program.
“As you all recall, Nasarawa State is always in the front burner on the issues of the implementation of the National Minimum wage in the country, the 2011 case was a reference point.
“I need to point out therefore, that since the passage of the National Minimum wage (amendment) Act in April this year, government has continue to make consultations with major stakeholders, including the organised labour on how to come up with wit a sustainable strategy for the implementation of the new national minimum wage for worker from grade levels 01-06 and consequential adjustment for workers of grade levels 07-16 therein for the benefit of all,” Sule stated.
Experts advocate alternative revenue generation sources, retrenchment
Meanwhile, experts have said for the states to be able to effect the payment of the new salary structure, they must employ alternative sources of generating revenue.
They say the IGR of most states is nothing to go by and that with the huge debts profile and loan repayment obligations, the negotiations that most states are making with labour unions is mere politics.
According to the experts, there is need states government retrench number of staff to enable them cope with the payment. They argue that most state employees who receive jumbo pay do not even have schedule. They said there is need for serious reforms in the state civil service.
The Chief Executive Officer, Economic Associates , Ayo Teriba, said with the impact of increase in wage bill , states must have other revenue sources to absorb the shock.
“Unless there is an increase in the sources of revenue, there will be less money for other capital projects and payment of salaries. The challenge before the states is to try and find new revenue sources to absorb the shock.”
Also, a former President, Association of National Accountants of Nigeria, Samuel Nzekwe, said state governments should not give excuses not to pay the new minimum wage because they were living in affluence.
“They should see how much they are going to bring out from their security vote because it is a big chunk of money. Secondly, they have so many aides. What are they doing? These aides are paid huge sums of money. They should prioritise their expenses.”
Only three states can survive without federal allocation – BudgIT
BudgIT, a civic group committed to government financial transparency, says only three Nigerian state governments can finance their recurrent expenditure without allocation from the Federal Government.
According to its report “State of States 2019” released recently online, the group said Lagos led the fiscal sustainability index, followed by Rivers and Akwa Ibom.
