Minimum wage controversy: Insights into advanced countries

As the minimum wage controversy hits its denouement, IMOLEAYO OYEDEYI offers both sides of the contentious arguments with fresh examples of the minimum wage payable in some advanced countries

For days, Nigeria was almost grounded. This had been long predicted due to the protracted controversy between Organised Labour and the Federal Government over the right minimum wage that should be payable to Nigerian workers given the prevailing economic hardship and strain gripping the country.

Before arriving at its current stage, negotiations between the government tripartite committee and the Organised Labour had consistently hit a brick wall with both parties offering conflicting quotations.

Recall that the unions had earlier given the May 31, 2024 deadline for the conclusion of new minimum wage negotiations after demanding N615,000.

However, the government only raised its minimum wage offer from N57,000 to N60,000, just as the labour unions reduced their demand to N494,000 from N497,000 they later proposed.

Despite several calls and threats from Organised Labour to shut down the economy if its minimum wage demand was not met, the government insisted on not increasing its minimum wage offer beyond N60,000.

The Minister of Information and National Orientation, Mohammed Idris, in a statement by his media aide, Rabiu Ibrahim last Saturday, said the proposed N494,000 minimum wage being demanded would result in an annual expenditure of N9.5tn, a burden he described as untenable for the nation’s finances.

Corroborating this, the Special Adviser on Information and Strategy to the President, Bayo Onanuga, also said the Organised Labour should be reasonable in its demand, except if it was using the declared strike to display its frustration over the loss of the Labour Party in the 2023 presidential election.

“Labour leaders need to be reasonable and not paralyse our economy unless they are using the strike as a continuous ventilation of the frustration they had when their party lost the 2023 presidential election.

“Can you pay your driver or cleaner N500,000 a month? Let’s not befuddle the issue: the government is not saying it is not reviewing minimum wage, it is saying it will pay something affordable and sustainable. N500,000 or N615,000 is out of it,” Onanuga wrote on his verified X handle.

The Attorney General of the Federation and Minister of Justice, Prince Lateef Fagbemi, SAN, also threatened legal action if the Organised Labour should go ahead with its industrial action move, describing it as “premature, ineffectual, and illegal”.

In a letter dated June 1 and addressed to the leadership of the TUC and NLC, Fagbemi noted that it was wrong for the Organised Labour to have declared a strike because the negotiations between them and the Federal Government on the new national minimum wage had not reached a conclusive end.

He said that Organised Labour should have considered the interests and capacities of all employers, including the organised private sector, in setting a minimum wage that benefits the entire working population.

Drawing attention to legal provisions, Fagbemi cited Sections 41(1) and 42(1) of the Trade Disputes Act 2004 (as amended), which mandate both NLC and TUC to issue mandatory strike notices of at least 15 days.

He argued that the failure of the labour unions to comply with these provisions renders their strike action illegitimate and unlawful.

Furthermore, Fagbemi questioned the legality of the proposed strike action, pointing out that the labour unions had not initiated trade disputes with their employers or issued any strike notices as required by law.

He emphasized the gravity of non-compliance with the mandatory 15-day notice, highlighting the criminalization of such actions under Sections 41 and 42(1) of the Trade Disputes Act.

“I wish to further draw your attention to the fact that the conditions outlined by our national legislation for exercising the right to strike are in tandem with the International Labour Organization principles concerning the right to strike.

“It is the position of the ILO Committee on Freedom of Association that the obligation to give prior notice, the obligation to have recourse to conciliation, mediation, and (voluntary) arbitration procedures in industrial disputes, etc are prior prerequisites for declaring a strike,” the AGF said.

However, despite the legal threat and intervention from the National Assembly, the Organised Labour commenced an indefinite strike on Monday, June 3, 2024, to press home its demand.

The move expectedly plunged the country into total blackout following the alleged shutting down of the National grid by members of the National Union of Electricity Employees in compliance with the strike.

Also, there was an utter breakdown of economic activities across the country as banks, airports, public schools, and courts were shut.

This triggered nationwide outrage and forced the Federal Government to convene an emergency meeting to find a way out of the impasse.

In a bid to move the negotiation forward, the Organised Labour on Tuesday temporarily suspended the industrial action for five days after President Bola Tinubu agreed to pay a national minimum wage higher than N60,000 and the tripartite committee pledged its readiness to convene daily until a new minimum wage is announced.

However, irrespective of the agreement reached at the national meetings, the issue of minimum wage has been the subject of heated public debates in recent times with many public analysts and social commentators supporting either the government or the striking unions on the contentious arguments.

While those on the side of the government argued that the demands from the Organised Labour were utterly outrageous and would further worsen the inflationary pressure afflicting the country, those with the counterargument said the labour unions wouldn’t have even resolved for industrial action if the government had been very sensitive to their plights and those of over 200 million Nigerians they represent.

In an article he shared on his verified X handle on Tuesday, a retired judge in the United Kingdom and good governance advocate, Dr Charles Omole, stated, “The demand by Labour for over N400,000 minimum wage is outrageous and unhelpful. Asking for over 1000% increase in minimum wage is bad economics in many ways. How do you take seriously Labour leaders who seem to be living in their imaginary world? Their basis for their demand is not good economics. Listing the average cost of transportation; food etc and coming to a figure is not the way to calculate minimum wage.

“Firstly; prices go up and down all the time. So will the wages awarded be reduced if there is a sudden crash in prices of goods and services?  Secondly; Minimum wage is not supposed to meet all your needs. It isn’t anywhere in the world. If you can meet most of your needs with minimum wage; what is the incentive to get an education and earn much more than minimum wage?

“A minimum wage of over N400,000 will also mean a similar increment for all wage levels above the minimum as well. So a director who earns 300k at the moment will now need to be paid over N1m per month.  As the minimum goes up; all levels get increased as well.

“Also, many in public service earn more than the basic salary. There are all manner of allowances and awards that are also paid. An increase in the minimum wage is not just an increase for the lowest-paid staff. All staff (including the Permanent Secretary) will also get an increase. This outrageous demand by Labour will bankrupt any economy and the government must resist their blackmail,” Omole posted.

He argued that “In saner climates; you don’t see labour going on strike over minimum wage. The government simply announces the percentage increases in the minimum wage without any organised protest. The misuse of strike actions by the NLC and TUC has become damaging to the collective bargaining in this country.

“The government should stand firm with the 100 per cent increase in minimum wage it has offered. Anything more will just be playing to the gallery. Some states have not been able to pay the current N30,000 up until now. How do you expect them to pay N60,000 much less over N400,000.”

However, in a contrary argument, Nigerian lawyer and former Director-General of the Bureau of Public Service Reforms, Dr Joe Abah, said, “A minimum wage of N60,000 per month is just N2,700 per day, using a 22-day work month. You cannot say that people should not factor in the cost of transportation, food, electricity, and petrol in calculating minimum wage. That’s bizarre.”

He argued that “It is also not true that most public servants have all manners of allowances. Finally, anyone trained in negotiation skills knows that you don’t give your best offer first. That is why if something sells for an average of N100 and you tell me it’s N500, I will price you N10. When you reduce to N400, I will increase to N20 until we both decide to stop wasting each other’s time.”

He said, “I am ideologically opposed to strikes as a means of resolving labour disputes, but we have always had people negotiating for the government based on the offices they hold not because they have had any negotiation training.

“Until there was a tiny increase a few months ago, a fresh graduate in the civil service took home about N48k (all in, including allowances). A Director who has put in 27 years of meritorious service, with a PhD on top, took home less than N300k (all in, including allowances). The pay and allowances of a few agencies like CBN, NIMASA, NCC, and others can give the impression that people are reasonably compensated in the rest of the public service. That is not the case at all.

“The majority are performing miracles just to get to work every day. Any economic shock like sickness or a Caesarean delivery immediately plunges them into abject poverty. That is the context. As a private citizen, I pay my domestic staff more than the government pays many of its staff,” Abah added.

Aside from the pro and con arguments, some analysts have also shared the minimum wages payable in some advanced countries and the procedures as well as legal principles that underpin the payment of these minimum wages.

It was gathered that both the National Minimum Wage and the National Living Wage exist in the United Kingdom. A health and safety specialist based in the UK, Babatunde Soile, told Sunday PUNCH that the current minimum wage payable in the British country was £13.

However, a publication obtained from the UK government website showed that every year on the 1st of April, the National Living Wage and National Minimum Wage of the country change with stipulated wage payment rate for all age grades within the country. For instance, since April 1, 2024, the new NMW in the country, stood at £11.44 per hour for workers of age 21 and above, £8. 60 for those between 18 and 20 years of age, £640 for workers between ages 16 and 17, and £6.40 for apprentices.

Providing more insights, Soile said only the UK government and a few private establishments often pay the fixed annual Minimum Wage as some private employers, who can’t afford it, do lay off their workers, who mostly would have no choice than to rely on the government monthly social intervention payment to survive pending the time they would be able to secure another job.

“There is a fixed Minimum wage in the United Kingdom, which I have told you. But most times, it is mostly those working under government agencies that can pay, even though it is established by law. Some private establishments sometimes may not be able to afford it and they end up downsizing. Their laid-off workers would have no choice in the interim than to rely on the government’s monthly social intervention payment, which may not even be enough for an individual to take care of himself and his family. So, getting another job as quickly as possible remains the best, but it is not always as easy as it may sound,” the UK health specialist told Sunday PUNCH.

However, in the United States, though the Federal minimum wage has remained at $7.25 per hour, many states in the country have minimum wage laws. In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages.

Offering more insights on this, a US-based media personality identified as General Oluchi on X said, “No one earns minimum wage in America, not the toilet cleaners, garbage disposal guys, fast-food workers, or even those who greet you in front of Walmart! No company pays $7/hour today. No Nigerian in the Diaspora earns $7/hour! A minimum wage is only a baseline of what a company can’t pay less than. Not what a company must pay you.

“The minimum wage is just a law that says you can’t pay anyone less than that amount no matter how bad things get. To be competitive, employers consider other factors before paying someone. The lowest hourly salary I have ever seen today is $15 – $17/hour and that’s for a low-skilled worker.

“The more skilled you are the more money you earn. My first salary 17 years ago was $12/hour (while the minimum wage was $6+), and I was fresh from Nigeria, fresh out of secondary school. I doubt that company pays that low to anyone today — even unskilled workers,” Oluchi posted recently.

Sharing similar perspectives, an environmental consultant based in the United States, Patrick Omenye, said, “The $7 per hour is for Federal government limit. Virginia minimum wage is $11 per hour and most people who earn the lowest earn $15 per hour. Even McDonald’s pays $15 at least.”

Similarly, a user identified on X as Gabriel N, who is a software engineer based in Brookfield, a city in Wisconsin, United States, posted, “It’s not even realistic for anyone to make any permutations based on the federal minimum wage of $7 per hour because almost every state has their operating minimum wage. For example, the minimum wage in Wisconsin is $7.25 per hour, while that of neighbouring Illinois is $15 per hour. And while New York minimum wage is $16 per hour, the District of Columbia has $17 per hour minimum wage.”

However, another user identified as Agba Man on X said, “That minimum wage has not been changed since 2009. The pernicious argument about raising the minimum wage to $15 has kept it there. Yet people are being paid more than that and the United States economy has not collapsed.”

OLADIPUPO@Best_2123 also said, “In summary, every job title in the United States has a customary pay level which means you can’t be paid below the level of your job title. The rate can even be dragged up if you have experience to back it up. I don’t think anyone is getting below $10/hour unless you’re a gig worker.”

Comparing this with the Nigerian situation, some observers have said it was expedient that each state of the federation be allowed to determine the minimum wage benchmark it can successfully pay its workers, even if there would be a Federal minimum wage for the country as being practiced in the advanced countries. However, it is still yet to be seen whether this will ever materialise in Nigeria as the minimum wage controversy lingers on.

However, there is no doubt that the current debate has stretched beyond the expectations of Nigerian workers, especially those in the public sector. While the payment of the new minimum wage ought to have begun in May, stakeholders are still engrossed in the haggling about what the new wage should be at the minimum level.