Speeches

2011 Workers' Day Celebration

May 1, 2011 - Let me start by thanking all of you singularly and collectively for your support for me, our elected officials and our great party, the Action Congress of Nigeria at the just concluded general elections.

As we gather to commemorate yet another anniversary of the World Labour Day, I do so with mixed feelings especially about the progress we have made in improving the lot and welfare of our productive population who generate the wealth of our nation, and I am concerned about our national inability to open the employment space quickly by vigorously pursuing and implementing policies that will galvanize our economy back to life.

My concerns are heightened by a combination of factors.

First, I refer to a part of my address at the Labour Day Anniversary in 2010 when I said:

"…I believe seriously that as we continue to have these matters, we must focus on how to evolve strategies that will reduce the cost of living, increase the purchasing power… the Nigerian worker has, and government makes it its continued responsibility to make sure that the cost of living does not over stretch the value of the worker's salary. That really is the key, the meat and the substance of my message to you today."

I made this suggestion then at the time the agitation for a new minimum wage was gathering momentum in 2010.

It was my view then and it remains my firm view today, that the root cause of agitation for wage increase was the daily diminishing purchasing power and value of the disposable income of the average Nigerian worker.

While I concede the legitimacy and sense of demanding for increased wages, I am not convinced that raising wages alone without more will improve the lot of Nigerian workers.

What I foresee is a simple adjustment of the same economic variables that have diminished the purchasing power of the Nigerian worker in a swift response to the wage increases so that in a very short time, we are likely to be back again where we all started, and commence the musical chair of fresh demand for wage increases within the foreseeable future.

Those economic variables include the lack of public power supply, that aggravates the cost of production, cost of transportation and cost of living which every member of the consumption chain simply passes on.

They also include the absence of long term funding that can catalyze economic activities like agriculture and housing that have the capacity to employ a large number of people on a sustainable basis.

These are in turn compounded by the high cost of funding characterized by double digit interest rates, and an import dependent economy that offers insufficient protection for local industries which results in enormous stress on our national reserves and devalues our currency with the consequential diminution of its local purchasing value.

Distinguished comrades, please indulge me if I am long. I do so because I am concerned and I desire to contribute to put an end to this charade of economic disappointments that have bedeviled our workforce for decades.

If anybody is still in doubt, I will refer you to the lessons of history characterized by labour agitations for increased wages, resulting in pay rises by the Adebo and Udoji Commissions.

Without sound economic policies and aggressive response to some of the problems I have highlighted, I am afraid that the salary increase that follows the implementation of the Belgore Commission may soon amount to no more than a victory at a battle and loss at war for organized labour.

This is a case where clearly money alone will not bring happiness.

We must be bold and audacious to demand a reform of our current federal structure with even greater vigour than was used to secure the wage increase.

The reality is that not all the 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 States and Local Governments.

Some Local Governments in Lagos are already feeling the pinch and in the last two months, the State Government has had to come to their rescue.

The truth is that if we continue like this, States and Local Government will struggle only to pay salaries and developmental activity will be jeopardized.

We have operated a revenue allocation formula that gives 52.68% of the country's income to the Federal Government (FG); 26.72% to the 36 States and 20.60% to 774 Local Governments for years.

Part of the justification for that huge percentage to the Federal Government (FG) was its management of many public facilities like Nitel, PHCN, Nigerian Port Authority, Airports, Nigerian Airways Limited, Nigerian National Shipping Line, National Insurance Corporation of Nigeria, Ajaokuta Steel Company, National Fertilizer Company of Nigeria (NAFCON), Nigerian Aviation Handling Company Limited, Nigerian Sugar Company Bacita, and other agencies.

Now that the FG has privatized or sold these agencies and expresses its clear desire to engage private capital to do more, the case for keeping that large chunk of the Federation's account is obviously no longer tenable or meritorious.

I have been privilege to serve as the Chairman of a Committee of the Nigerian Governor's Forum set up to propose an amendment of the Revenue Allocation Formula, with the Governors of Adamawa, Enugu, Niger, Rivers and Sokoto States as members.

We have concluded our deliberations and produced a report proposing an amendment of the Revenue Allocation Formula such that the Federal Government of Nigeria now gets 35%, States get 42% and Local Governments get 23%.

It is my firm view that 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 implementation of the recommendation to amend the revenue allocation formula is a condition precedent that will help us stem any labour crises.

The second policy initiative which must in my view follow, is the accelerated completion of the privatization of the power sector to be complemented by the payment of all monies owed to the States and Local Government by agencies such as NNPC, the Nigerian Custom Services, the Federal Internal Revenue Services and other Federal Government Agencies who earn or manage our collective resources and who have 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 to the Federation account. This is in clear violation of Section 162 (1) of the Constitution.

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.

More importantly, at this time when oil prices are still exceeding our economic expectation as a result of the political developments in North Africa and the Middle East, organized labour must demand a more development focused budget that allows us to invest at least 50% 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, hospitals and water supply for healthcare to mention but a few.

This is a short term strategy for immediate job creation and poverty alleviation which massive construction will create as we have done in Lagos over the last four years. The development of the power sector, to reduce cost of production, agriculture to reduce cost of feeding and similar policies will help stabilize the erosion of the purchasing power of the worker's income if it does not improve it immediately.

Dear comrades, these are some of the thoughts that are upper most in my mind about the road we must travel together in the next four years.

It requires all of us to see it as a journey of necessity in which we must commit to being various parts of the solutions and resist the temptation to be parts of the problem.

While I am not certain how much success we will achieve if we make the effort, I am certain that nothing will improve if we fail to make the effort.

Please accept once again my hearty congratulations to you all on this anniversary.

God bless you all.

Eko o ni baje.

Babatunde Raji Fashola, SAN
Governor of Lagos State