MINIMUM WAGE

Governors’ Forum and politics
of minimum wage
Condemnation continues to trail the
recent calls by the Governors
Forum for the removal of petroleum
subsidy as a pre-condition for
payment of the N18,000 minimum
wage, NDUBUISI ORJI writes
Thursday, June 30, 2011
The Nigeria Governors Forum
stirred the hornet’s nest last week
when it called for the removal of
petroleum subsidy as a pre-
condition to paying the 18, 000
minimum wage to workers in its
employment. Several State
governors have been on war path
with their state branches of the
Nigeria Labour Congress(NLC) over
the implementation of the minimum
wage recently enacted by the
National Assembly at the twilight of
the sixth session of the Federal
Legislature.
Besides the call for the removal of
petroleum subsidy, the Governors
Forum also wants a review of the
revenue allocation formulae before
states can pay the new minimum
wage. The forum says the current
revenue sharing formula is lopsided
in favour of the Federal
Government. The Federal
Government currently takes 52 per
cent while the 36 states and 774
local governments share 26.72 per
cent and 20.60 per cent
respectively.
The NGF at its last meeting adopted
the report of ad-hoc committee it
had earlier set up to recommend a
new revenue sharing formulae. The
committee headed by Lagos State
governor, Babatunde Fashola, had
recommended that Federal
Government , state and Local
Governments should get 35
percent, 42 percent and 23 percent
respectively in the proposed
revenue sharing formulae.
Expectedly, the NGF position,
especially regarding the removal of
petroleum subsidy, which was
made known by its chairman and
Governor of Rivers State, Mr
Chibuike Amechi has not gone
down well with the populace
especially the NLC. The reason for
this is not far-fatched. The issue of
removal of petroleum subsidy has
been a sore point in the relationship
between the Federal Government
and the organised labour. Previous
attempts by the government to
remove the subsidy on petroleum
products had always been greeted
by protests by the NLC and the civil
society.
According to Amechi, funds that
hitherto go into subsidy should be
plunged back into the federation
account and shared among the
various components of
government, so as to make more
funds available to the states.
Not a few think the governors
position is antithetical to welfare of
Nigerians. Surprisingly, the
governors position is coming few
weeks after they secured the
peoples votes. During the
campaigns, the governors had
made promises to the electorate, A
Labour Party chieftain in Edo State
and former Chief of Staff to the
former governor of Edo State, Mr
Isaiah Osifo told Daily Sun in an
interview that NGF position on the
removal of petroleum subsidy is
motivated by selfish considerations.
He said they do not need the
removal of the petroleum subsidy
to pay. According to him, if the
states manage their resources very
well, they will have enough to pay
the new minimum wage without
the removal of the petroleum
subsidy. Osifo contended that “ It is
not the amount that is significant,
but the management of the
resources at the disposal of the
governors that is significant. After all
the budget that was put in place last
year was done on the benchmark of
47 dolars per barrel. But now a
barrel goes for over 100 dollars. So
what has happened to the surplus.
It is not removal of subsidy that is
the matter but the management of
what is available. If a budget is
packaged on the basis of 47 dollars
per barrael and you are now selling
at a hundred dollar, so you have
made more than 100 percent of
what you anticipated.” He added
that the subsidy can remain as the
nation’s assistance to the down
trodden. “That is why you have tax
rebate in advanced countries. There
is no country that does not have
welfare programme to take care of
the vulnerable. There are always the
vulnerable in all the society, and a
responsible government can always
put in place policies that will take
care of this vulnerable. If we are
making surplus revenue from oil
sales , that surplus is enough to
install a micro-economic set up that
can retain the subsidy for the
interest of the vulnerable.”
Statistics from the Petroleum
Product Pricing Regulatory
Authority (PPPRA) indicates that, the
Federal Government subsided
petroleum products to the tune of
N621.5 billion last year. Kerosene is
subsided to the tune of N111.01k per
litre. Daily consumption is eight
million litres. The pump price is N50
per litre. It costs N161.01 per litre to
get it to the filling station.While the
agency’s pricing template for June,
2011 shows that a litre of petroleum
product is subsided with N81.
The implication of this is that if the
subsidy is removed as the
governors are championing, the
pump price for fuel would cost as
much as 147 per litre. While
Kerosene would go for as much as
161 per litre.
The President-General of the Trade
Union Congress, Mr Peter Esele aptly
captured the the implication of the
removal of the subsidy on
petroleum product , in a recent
interview with a national daily.
“What they (governors) want to
create is chaos. When you pass a
law, are you giving a condition for
its implementation? We have passed
the stage of negotiation; if they had
said that during the negotiation, it
would have been in order because
we could negotiate. But now, the
National Minimum Wage Act has to
be respected,” Esele stated. He
added that “The National Minimum
Wage is a law. They have to respect
the law by implementing it;
otherwise they would be seen as
not respecting the law. We will do
everything to ensure the
implementation of the National
Minimum Wage.”
Analysts believe that instead of the
Governors Forum calling for the
removal of petroleum subsidy, it
should redouble its efforts and its
agitation for a new revenue sharing
formula that would put more
money at the disposal of the states.
This is because of the tension the
removal of subsidy would cause in
the polity coupled with the untold
hardship that it will engender. It was
the long drawn struggle against the
removal of petroleum subsidy by
the organised labour that made Edo
State governor, Adams Oshiomhole
very popular as NLC President. It is
doubtful if the present leadership of
the union would abandon the
struggle just so soon.
Already, the NLC has given
indication that it will not allow the
proposal to sail through.
Responding the Governors call, the
NLC Deputy President, Comrade
Promise Adewusi said the labour
union will oppose it with every
weapon at its disposal. “We don’t
begrudge them for asking for
increase in their revenue allocation
formula. It is an act of laziness and
lack of creativity. But we won’t allow
them to inflict more pain on
Nigerians because they want more
money. Insecurity in the country is
as a result of poverty. Now, they
want to compound people’s
problems by removing fuel
subsidy. We will stop them by all
means possible,” he stated recently.
The NGF has overtime
metamorphosed from a mere
assemblage of state governors to a
very strong pressure group. In the
recent past, whatever the governors
set their mind on, they achieve. On
the other hand, the organised labour
has been very vehement in its
opposition to the removal of the
subsidy on petroleum products. If
the Federal Government hearkens to
the all powerful Governors Forum
and remove the subsidy on
petroleum products, the stage
obviously will be set for the mother
of political cum economic battle. It
may just be one battle the NGF
would never win.