Press Releases

Minimum Wage: Fashola Advocates Urgent Constitutional Amendment To Avert Crisis
…Says current revenue allocation formula in favour of FG no longer justifiable

May 1, 2011 - Lagos State Governor, Mr Babatunde Fashola (SAN) on Sunday advocated an urgent review of the 1999 Constitution as it affects the current federal structure in order to avert an imminent crisis resulting from the recent increase in the minimum wage of public servants in the country.

Speaking at the Onikan Stadium venue of the 2011 Workers Day Commemoration with the theme "Growing the National Economy for Job Creation and Peoples Welfare", Governor Fashola also canvassed for an urgent amendment of the country's revenue allocation formula in order to give more money to the States and Local Governments.

The Governor added that almost all states of the federation would not be able to pay the new minimum wage structure until the country's revenue allocation formula is reviewed within the constitutional context in favour of other federating units.

"The reality is that not all states will be able to pay the new wage structure unless there is an urgent amendment of the country's revenue allocation formula that gives more money to the state and local governments," he said.

Governor Fashola further noted that some local governments in Lagos State "are already feeling the pinch and in the last two months, the state government has to come their rescue" in order to meet up with the new wage structure.

On this ground, Fashola added that if the situation "continues without any major intervention, the state and local governments will struggle only to pay salaries and developmental activities will be jeopardised in the country".

The Governor explained that the country's revenue allocation formula, which gives the lion share of 52.68 percent to the Federal Government; 26.72 percent to the 36 states of the federation; and 20.60 to the 774 local governments for years, could no longer be justified in the light of current realities just as it could no longer guarantee the implementation of the newly approved minimum wage structure.

According to Governor Fashola, the rationale for retaining such a huge percentage of the country's revenue by the Federal Government was to enable it manage many public facilities which had now been privatized.

He named the public facilities to include NITEL, Power Holding Company of Nigeria, Nigerian Port Authority, Nigerian Airways Limited, Nigerian National Shipping Line, Ajaokuta Steel Company, National Insurance Corporation of Nigerian, National Fertilizer Company of Nigerian, Nigerian Aviation Handling Company, Nigerian Sugar Company and other agencies.

He said now that the Federal Government "has privatized or sold these agencies and expresses its clear desire to engage private capital to do more, the care for keeping that huge chunk of the Federation Account is obviously no longer tenable for meritorious."

Noting that a lot of work has been done towards the realization of a more equitable revenue allocation formula in the country , Governor Fashola explained: "I have been privileged to serve as the Chairman of a Committee of the Nigerian Governors' Forum set up to propose an amendment of the Revenue Allocation Formula, with Governors of Adamawa, Enugu, Niger, Rivers and Sokoto States as members. "

"We have concluded our deliberation and produced a report proposing an amendment of the Revenue Allocation Formula such that the federal Government now gets 35 percent; states get 42 percent and local government get 23 percent.

"In order for the newly approved minimum wage policy to be effective and sustainable and in order for the states and local governments to still be able to function and provide basic social services, the adoption and the implementation of the recommendation to amend the revenue allocation formula is a condition precedent that will help us stem any labour crisis," Fashola explained.

He also sought an accelerated completion of the privatisation of the power sector to be complemented by the payment of all monies owed to the states and local government by agencies such as the Nigerian National Petroleum Corporation (NNPC), Nigerian Custom Services (NCS), Federal Inland Revenue Service (FIRS) and other Federal Government agencies which earn and manage collective resources and implemented a policy not backed by law that allows them to deduct or defray their operational expenses from revenues collected on behalf of the Federation rather than paying them into the Federation account.

Noting that the practice "is in clear violation of Section 162 (1) of the Constitution," Governor Fashola said :" The correct and lawful practice is that the operations of these agencies of the Federal Government must be funded by the Federal Government from its own budgeted share of the federation account and not by any deduction at source as appears to have been the case."

"At this time when oil prices are still exceeding our economic expectation as a result of the political development in North Africa and the Middle East, organised labour must demand a more development focused budget that allows us to invest at least 50 percent of our budget in every state and the Federal Government in capital projects for the development of critical infrastructure like roads for transport, schools for education, hospital and water supply for healthcare to mention, but a few," Fashola explained.

At the well attended celebration which also witnessed a colourful parade by representatives of various unions and professional associations were the state Commissioner for Establishment, Pensions & Training, Mr. Jide Sanwo-Olu, Head of Service, Prince Adesegun Ogunlewe, Chairman of the state Chapter of Nigeria Labour Congress (NLC), Comrade Idowu Akinlabu and Chairman of the state Trade Union Congress (TUC), Comrade Hakeem Kazeem and representative of the Minister of Labour and Productivity, Alhaja Nofisat Arogundade among others.