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Minimum wage, Nigerian workers and the issues

Muiz Banire > The Sun Articles  > Minimum wage, Nigerian workers and the issues

Minimum wage, Nigerian workers and the issues

For some decades now, and up till the moment, there seem to be raging controversies surrounding the issue of workers’ remuneration inNigeria. I recall my growing up days, when the Udoji minimum wage was agreed upon in the nation. It was so named because Chief Jerome Udoji (an astute public administrator) chaired the Public Service Review Commission (1972-1974) that recommended, among others, a new salary structure that automatically led to an increase in salary for civil servants in Nigeria. The meaning and context of the then minimum wage, I seem not to know and, up till possibly some few weeks ago, I had not really appreciated the import of the agitation for increment in remuneration, commonlyknown in Nigeria as “minimum wage.” I perceived the issue cursorily, like most other Nigerians, as salary increment. In other words, I used to equally treat and consider the two terms interchangeably. That this is, however, not a correct exposition of the reality lies in the appreciation of the broad distinction that exists between salaries and wages, with each distinctly attracting different implications. Our inability, as a people, to appreciate the distinction between salary and wages is responsible for perennial dispute over what the minimum remuneration of an average worker in Nigeria should be. Before I proceed further, let me acknowledge my brother, friend and Oga, the Honourable Ministerof Works and Housing, Mr. Babatunde Raji Fashola, SAN, who triggered my thoughts in this regard in a recent five-minute conversation. The basic questions are: What is salary? What is a wage? Are salary and wage synonymous? Can they be used interchangeably? These questions form the crux of this discussion and the attendant incidents.

Salary is a remuneration package for a worker payable on a periodic basis, commonly yearly, but determined through the performance of the worker. Although the word “salary” does not lend itself to a singular definition, certain features are common to the different definitions accorded the word. The fact that it is paid at regular intervals (usually monthly) on a yearly basis is one of the common features. Salary is not usually elastic within the predetermined period. It is also not a feature of salary payment that a further reward is given to a worker over excess time put up in the course of his performance. In other words, payment for overtime is not normal under the salary system. Furthermore, salaries are often paid to skilled workers (professionals or semi-professionals) as opposed to the semi-skilled and unskilled workers.

Wages, on the other hand, are not periodically fixed, as they are a subject of time determination (usually hourly). That is, the amount of remuneration accruable to a worker in this category depends cumulatively on the number of hours put in. Put simply, the New Webster’s Dictionary of English Language (International Edition) describes “wages” as: “[A] Reward received by non-professional workers, usually in the form of weekly payment of an agreed sum … calculated either according to the hours worked (including overtime) or according to the work done (piecework).”

That is why a worker that presumably does overtime by putting in additional hours beyond that expected of him earns an additional pay in a wage structure. The amount payable to the worker is flexible in accordance with extraneous factors but essentially on number of hours put in. Generally speaking, wages are applicable to semi-skilled and unskilled workers, for example, cleaners, drivers, part-time workers, artisans, etc. This is what is often called minimum wage. That is, the minimum amount that a worker will earn per hour or per day. Obviously, the ongoing negotiation is neither based on per hour nor per day. Contrary to salary payment system, wages are often paid on daily/hourly basis. From the above, it is obvious that so many distinctions exist between the two concepts. The implication of this is that the two terms cannot be used interchangeably, as they attract different legal consequences.

Therefore, in the context of the ongoing negotiation in Nigeria, we must ask which of the two concepts are applicable, particularly in the public service where the agitations are often pronounced. It is my preliminary view that what is obtainable in the public service as remuneration scheme is the salary system. The question, therefore, is, can minimum wage be set underthe system? Methinks not. This is so because Nigerian workers are neither paid on hourly, daily nor weekly basis. Should we assume (without conceding) that the minimum wage of N30,000 is applicable as proposed, it then means that all other categories of workers’ remuneration stay where they are, and the periodic amount will vary with the number of hours put in by the worker. The import of this is that the worker earns more when he puts in extra hours beyond the period contemplated under his contract of employment. The further implication of the above is that the minimum wage settled for will only apply to workers at the entry level. Furthermore, the performance indicator will also change from performance as obtainable under the salary system to time put in. This, I am sure, is not what is obtainable under the present salary structure of the public service. Therefore, the continuous usage of the term “minimum wage” in the salary negotiation is a misnomer. It is noteworthy that once minimum wage is agreed, adjustments are made by way of percentage increment for all other categories of workers on higher grades. For example, if the percentage increment difference in the minimum wage increment is 80 per cent, then the emoluments of all other workers beyond the entry level will have to be adjusted up, otherwise the entry level staff will earn more than their immediate superiors. Once this happens, you cannot claim to besetting minimum wage, rather what is being done is salary increment. Here lies the conceptual confusion. The further folly in this arrangement becomes apparent when the agreed minimum wage is decomposed into hourly payment within the contemplated work period.

For example, if N30,000 is taken as the minimum wage and divided into 160 hours, presumably to be spent by a salaried worker, then you get about N188 per hour. This is the minimum wage in the technical sense of the word. What this means is that, if any of the workers should spend beyond those hours, he would be entitled to additional pay premised on the excess hours spent. This is an impossibility under the salary system and, by extension, the practice in the country presently.

Thus, from the above discussion, in my view, what we are seeking to do and is being done in a recurrent manner is salary review rather than settingh the minimum wage. Once we appreciate this difference, then we can navigate the issues safely and easily agree on the parameters for negotiation. I believe it is the conceptual confusion that is the root of the continuous friction in the remuneration process. In this regard, let me refresh our memory on the stratification of workers.

There exists in each organisation, the skilled, semi-skilled and unskilled. In most countries, there is proper stratification of members of the public service or workforce. There are those entitled to the benefits of the salary system, who are skilled workers, and who deal largely with administrative issues. On the other side are the semi-skilled and unskilled, who receive wages. This makes negotiation easier in those countries.

In Nigeria, except and until we adopt this model, not only are we going to continuously face the challenge of remuneration negotiation, we will continue to have soaring remuneration bill. No wonder our personnel cost continues to take a large chunk of our budget without commensurate productivityto show for it. As could be inferred above, skilled workers in other countries are those who actually enjoy salary payment, since their outputs are measurable by performance, while the semi-skilled and unskilled are placed under the wage structure. It is often difficult to measure the output of the latter categories, and that is why hourly evaluation is often applied. In the public service today, the unskilled workers whose services are often required for some hours are lumped with the skilled ones, with the attendant salary burden and gratuity. For example, a cleaner, needed for about two to three hours a day is lumped with the skilled workers on salary payments. Certainly, the output cannot justify such monthly payment, hence the ballooning of the wage bill. The summation of the above, therefore, is that we need to draw the dichotomy between the two categories of workers so as to apply the appropriate remuneration system. Wages should, going forward, be applied to the semi-skilled and the unskilled. Beyond this is the reality that, globally, and in most corporate settings, roles of the latter category of semi-skilled and unskilled are now outsourced to other entities that provide such services. This eliminates largely the wage burden and its attendant contingent liabilities. The approach is largely recommended in solving our perennial struggle over adequate remuneration. The caveat here is that this advocacy on stratification is futuristic, as I do not advocate the retrenchment of workers on this basis or the immediate classification that will impair their present entitlements. As they, however, wither off, we need to start the classification with the new entrants. Let me state that this is the function of the Salaries and Wages Commission but which, strangely, has not been noticeably done. In most negotiations, I find the office of the Honourable Ministerof Labour or, worst still, the Federal Government negotiation team, consisting of several ministers and permanent secretaries, doing this job. This commission must wake up to justify its pay and be proactive.

Of further interest in this discussion is the issue of uniform salary structure. As rightly observed already, in a lot of quarters, this is not only in dissonance with our federal structure, it is totally unrealistic. Apart from the variable of the economic factor of each state differing, there is differing economic power to pay. Most importantly, the operating milieu of each set of workers differs. For example, the cost implication of housing in states like Rivers, Lagos and even Abuja can never be compared with those obtainable in most other states. In the same vein are the costs of transportation and food. These are factors often considered in fixing emoluments. I remember, in my days in the academia, there existed seemingly discriminatory allowances in housing for university staff in those three cities. I do not know whether this is still obtainable but suffice to say that it is the way to go. This must be part of the restructuring required in the country. Not only must we have different regimes for salary and wages, we must also pay attention to the dichotomy between salary and wages. This enhances productivity and promotes freedom of choice as obtainable in the private sector. Mobility of labour is an essential part of growth and must be encouraged. This, in my view, is the path to follow, not only in resolving the immediate logjam but also navigating the road to the future.

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