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‘How not to fund the new Minimum Wage’

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After series of negotiations between the Federal and State Governments, the Organised Private Sector and the Labour Unions, it was agreed that the new National Minimum Wage in the country, should be increase from N18,000 to N30,000.00 monthly.

The National Assembly passed the National Minimum Wage (Repeal and Enactment) Bill 2019 which President Muhammadu Buhari signed into law on April 18, 2019.

However, it must be noted that some states had earlier expressed their inability to pay the new National Minimum Wage. Within this context, President Buhari had inaugurated a Presidential Technical Advisory Committee (PTAC) on January 9, 2019. The Committee was charged with the following terms of reference:

(1) To develop and advise government on how to successfully actualise the objective of a seamless implementation of the impending wage increases.

(2) Identify new revenue sources as well as areas of existing expenditure from where some saving could be made, in order to fund the wage increases without adversely impacting the nation’s development goals as set out in the ERGP

(3) Propose a work plan and modalities for the implementation of the salary increases; and

(4) Any other suggestions that will assist in the implementation of this and future increases.

The PTAC had since submitted its Report to the President. Nonetheless, our interest is awakened by the media reports of the recommendations of the PTAC that in order to raise additional revenue, government should sell state-owned enterprises. The enterprises are in the petroleum, mining and solid minerals sector; agricultural resources such as the various river basin development authorities, media assets such as the NTA, Radio Nigeria, News Agency of Nigeria, Nigeria Film Corporation, stadia, concessions of airports etc. The clear meaning of this approach to raise revenue is to privatise state owned assets built by public funds.

Government, according to the reports, needs about N4.2 trillion to be able to pay the new National Minimum Wage. The question is whether the sale of government assets would sustain the payment of the new wages going forward.

The country has gone through this route of selling government assets some years ago. The outcome was to enrich the political class; most of the privatised companies were never turned around. The sale of government assets such as the Nigerian National Petroleum Corporation (NNPC) should not even be contemplated based on the importance of oil in the country’s development calculus.

NNPC FEB 2019 REPORT

There exist other frameworks such as commercialization that can make state-owned enterprises to be effective and efficient. The issue is to have a robust and transparent governance that would fight corruption, thievery and outright looting of the treasury to preserve or utilize such funds for the benefit of all Nigerians.

More still the unsustainable emoluments of politicians, which currently consumes upward of 20% of the national budget, needs whittling down and aligned with general emolument.

The Liberation Party of Nigeria (LiP) is committed to operating an economy in which the private sector will be allowed to participate in the economy as much as will be necessary, but at no point shall the role of the private sector be allowed to conflict with the need for social equality, welfare and national sovereignty.

It is our view that to generate additional revenue, government should block the looting of the economy, reform the tax administrative system so that the rich can pay more tax; monetize oil receipts at N360.00-U$ to the government; reduce or eliminate waivers, incentives and exemptions thereby increasing revenue for government. We caution that the increase of VAT from 5% to 7.5% will hurt the populace, and while it may bring additional revenue to states, will ultimately discourage investment particularly at this point when diversification of the economy is crucial, and unemployment is very high.

It should be noted that though the N30,000.00 Minimum Wage will bring some instant relief to workers, it is however, a far cry as per the N66,000.00 monthly wage necessary in the context of the cost of living index. The workers would have some relief if government enacts policies that would return to providing quality education, quality health delivery and housing, among others, to workers and Nigerians in general.

There is need to invest massively in various social programmes. Government should implement policies that would change the structure of the economy from that of consumption to production.

We need to restate that money saved from fighting corruption, taxing conspicuous consumption of the rich, broadening the tax net and, providing mass private and public sector employment as well as the provision of basic needs to Nigerian workers, would enhance their welfare rather than a one off sale of state-owned assets.

Professor Idowu Awopetu.

Chairman.

Liberation Party of Nigeria (LiP)

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