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Fashola Urges Re-Examination Of Effectiveness Of Increased Minimum Wage As Solution To Improve Workers Welfare

Mar 22, 2010 - Lagos State Governor, Mr Babatunde Fashola (SAN) on Monday urged the Labour, Government and Organized Private Sector to critically examine the issues involved in raising the minimum wage and determine if it constitute the solution to an improvement of the welfare of workers.

Governor Fashola who spoke during a courtesy visit to the Lagos House, Ikeja by a team of National Committee of Experts on Parameters for Wage Determination in the Federal Public Service said there are more questions than answers for the committee on steps that Nigeria has taken in the past about raising wages.

“Should we be fixing minimum wage in the way we have done them in the past and with the results that we have got?. If we should, who are the people that the minimum wage should apply to. Is it applicable to everybody or are some people to be exempted. Is it blue collar jobs or white collar jobs”

Governor Fashola also asked: “Is it just enough for the Federal Government to just issue circulars and states to comply when it keeps over 52 percent of national revenue without giving other tiers more money. If you aggregate all the employees of the state together does the Federal Government employ more. Do they have a right to impose on us without giving more money”.

He added: “What is the level of enforcement?. Can we enforce the minimum wage across board? What will happen if a state cannot employ when the minimum wage is raised? Can we say the people have really benefitted from this, if the same states cannot pay?

While reminding that employment constitutes a social safety net, he added that what works in some jurisdiction might not work wholesale elsewhere, wondering what the effects on the larger economy would be, if some states cannot pay a higher wage bill adopted by the Federal Government.

Governor Fashola asked: “Why are we concerned about the minimum wage?. I think it is because we are concerned about the quality of life of the people. But if that is the case, is it increasing the minimum wage that would solve the problem?. Why don’t we consider that what really is making that quality of life difficult in the country”.

“How much are the people spending on water and how much of the disposable income are the citizens earning and how much of it is taken up by buying water, diesel as well as what is spent on power, security and rent?”.

The Governor noted that it is possible for government to mitigate the problems through direct interventions which can make power more reliable and reduce the cost of services to the people such as by building rail services that make transportation cheaper and faster.

Governor Fashola said one of the actions that government needs to take in the housing sector is to take a second look at the law on how much can be invested on housing as the present regulation limits investment in the sector.

He reiterated that if government is really keen on assisting the people to own their houses, it should work on the law to enable people get houses on mortgage which would not only reduce the cost on rent but also improve the disposable income available to each person.

He said even in terms of the private sector what are they expected to do when wages increase and they cannot cope, will they lay off staff, recalling that everyone is all too familiar with what pay rise at different time did to the Nigerian economy.

“Even if we say only those who employ twenty people would be affected by the law on wage increases, will Nigerians not resort to employing only lesser number of people in order not to fall within the bracket. What impact would that have on unemployment figure”, he added.

Governor Fashola advised that what is really needed is a real root and branch examination of the issues involved in raising wages to better the lot of workers before making recommendations.

The Governor assured that he has no misgivings about increasing wages of workers so long as such action is on the right course and can be enforced.

Speaking earlier the Chairman of the Committee, Professor Vremudia Diejomaoh commended the wonderful work which the present administration under Governor Fashola is doing across the State.

He said the 13 member committee is saddled with the responsibility of coming up with a wage policy that would be for periodic wage adjustments in the public service instead of the present ad-hoc system that often lead to crisis.

Professor Diejomaoh added that the committee is also expected to come up with the suggestions on parameters for determining the proportion of revenue that was going into personal emoluments while taking into consideration what is happening in developing and the developed world.

He explained that the committee is also to develop a regular system that would be self adjusting in terms of the relationship between the mechanisms for fixing wages and salaries for political appointees vi-a-vis public servants and the relativity that should exist for stability in the system.

Professor Diejomaoh said the committee also intends to learn from the States by seeing what they are doing. He added that it is recognized that the States have autonomy and that what happens at the Federal can affect what happens at the State.

The event was attended by some members of the State Executive Council especially the Commissioner for Establishment and Training, Mr Jide Sanwo Olu and some members of the Committee on the entourage of the Chairman.