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Nigerian textile workers body presses for minimum wage

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Nigerian textile workers body presses for minimum wage

Postby Richard Akindele » Tue Jun 28, 2011 1:55 pm

The National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN) has asked the Governors of various States in the country to ensure immediate implementation of the minimum wage of Nigerian Nairas 18,000.

Comrade Issa Aremu, the General Secretary of NUTGTWN and a Vice President of Nigeria Labour Congress (NLC), has advised the Federal Government, Governors, and private employers to pay the new wage to avoid closure of textile and garment industries in the country.

The labour leader was reacting to a statement made by the Governor of Rivers State, Mr. Rotimi Amaechi, who said that in the absence of a new revenue allocation formula, the State Governors will not be able to instantly implement the NGN 18,000 minimum wage.

Mr. Aremu explained that the new minimum wage of NGN 18,000 was agreed to by stakeholders based on several factors including the present revenue allocation formula, the ability of both the public and private employers to pay, the capacity of the economy, as well as modest working conditions of a minimum wage earner.

Some of the major stakeholders who negotiated the new minimum wage included the Federal Capital Territory Administration, all State Governments, representatives of Small and Medium Enterprises (SMEs) and Organized Private Sector (OPS), he said.

He further elaborated that expert opinion was sought from various key professional organizations and institutions including the National Planning Commission; Nigeria Institute of Social and Economic Research (NISER); Revenue Mobilization, Allocation and Fiscal Commission (RMAFC); CBN; Nigeria Association of Small and Medium Enterprises (NASME); and National Productivity Centre (NPC).

The Tripartite Committee on the National Minimum Wage negotiated and considered the NGN 52,000 demand put up by the Nigeria Labour Congress, and decided on the upward revision of national minimum wage to NG 18,000 from the earlier minimum wage of NGN 5,000 of State and NGN 7,500 of Federal Government employees, he added.

Mr. Aremu said it would be better that all the three stakeholders – the State Governors, private employers, and Federal Government – implement the new minimum wage at an early date to avoid boycott by workers and the accompanying burden of arrears.

Stressing on the two years long consultation process carried out by the all-inclusive committee to arrive at a minimum wage, the NUTGTWN leader said that the present NGN 18,000 is based on the current revenue allocation formula.

Hence, a new minimum wage rate higher than the present NGN 18,000 has to be worked out as and when there is a new revenue allocation formula. The present revenue allocation formula is dependent on various social and macro-economic factors such as costof living, oil revenue, levels of poverty, labour productivity, and performance of the non-oil sector, he added.

In 1982, workers in Nigeria earned around US$ 200 per month and the presently agreed NGN 18,000 is less than that amount, according to Mr. Aremu. He stated, “National minimum wage is the lowest legally permissible level of wage payable by the employers. It is a national economic and social heritage which should not be discontinued.”

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Postby Richard Akindele » Tue Jun 28, 2011 2:47 pm

On the surface, mandated minimum wage seems like a good thing. After all, what could possibly be bad in laws that forces higher pay for workers. Unfortunately, there are many downsides to forced wage levels.

The way Nigeria is currently, a large portion of the economy is comprised of people who work for themselves. This means people in this category are not going to benefit from any minimum wage laws.

Self employed people are therefore, likely to increase the price of goods and services they provide. In other words, minimum wage may lead to an increase in the cost of goods and services.

What then would be the advantage of higher pay, if the cost of products you buy also increase?

If I am an employer, and I'm forced by the government to pay higher wages to my employees, guess what happens to the price of any goods and services I produces? I'd increase the price to make up for the extra expense of paying my employees.

Furthermore, minimum wage is set arbitrarily. It is not based on any market forces. There is a major battle raging in the USA between free-market advocates, and Labour unions. Labour unions, with the help of government, impose high wage obligations on employers. Employers who can't afford it, ultimately decide to outsource their operations overseas. This leads to high unemployment in the USA, as many employers move their operaton to Mexico, China, etc, where labour cost is lower.

Some employers find ways to mitigate minimum wage laws by laying off some of their employees, and making the remaining employees do more.

Minimum wage laws also affect government workers. If any state government finds it difficult to pay the high wages, it is simply going to raise taxes on everybody. It may also reduce other benefits to try to make up for the mandated minimum wage increase.

We need to think very carefully before mandating minimum wage laws on employers in Nigeria.

A classic example of the dangers of minimum wage laws is what is currently happening in Greece. Workers in Greece are striking, including Doctors, Air traffic controllers, etc. They are striking because the government cannot pay the high wages Labour unions have negotiated over the years. High wages and other Labour union laws bankrupted Greece. So now that the government is cutting wages to try to make Greece solvent again, workers who have been used to mandated high wages are going on strikes.

We don't want to turn out like Greece. So we must be careful how much influence we allow labour unions to have in Nigeria.

Goodluck Jonathan is naive to have signed this minimum wage bill into law. If our president really wants to help the economy, he needs to focus on one thing first and foremost - and that thing is 24/7 electricity all over the country.

With stable power, more people can establish businesses. The more businesses there are, the higher would be the demand for workers. The higher the demand for workers, the higher the wages paid by employers.

Put another way, if Goodluck Jonathan creates an economy where employers are fighting to get workers, the employers would voluntarily offer higher wages. This is known as free market forces.

Here is the bottomline, we do not need Labour unions arbitrarily imposing high wages on employers. Instead, let the free market determine wage levels. Countries that force high wages, often get in huge debt, and ultimately collapse, like Greece did.
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