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Minimum Wage Fixing in International Relations: Precarious Federalism as Dynamic of Labour Unrest
By Bola A. Akinterinwa
Minimum Wage is a measure of standard of living below which a fresh negotiation for reduction is unacceptable. A wage is an instrument of relationship between an employer and an employee. The wage can be attractive or unattractive. When it is attractive, wage earners freely move from low paying organizations to better-paid companies. In fact, a wage partly determines the extent of commitment to an employer. When potential wage workers are seeking jobs, whatever is to be paid is hardly taken as an impediment or a big deal. What is considered important is earning a wage. However, a wage becomes a big deal after gainful employment, by which time employees, especially with new windows of opportunity, begin to look elsewhere, seeking better offers in the quest for higher standard of living.
Perhaps more interestingly, there are people looking for a job placement and there are also people employers are looking for. When employers are targeting a category of employees, employers are always prepared to pay more attractive wages. Thus, a wage is largely a function of standard of living. In this regard, it should be noted that there is a living wage, that is, a wage that enables a minimum, civilized and acceptable level of living. There is also a hardship wage that only enables transportation of wage earners to their places of work, but not to earn enough to survive and live above the international poverty level.
Most unfortunately, it is this type of hardship wage that obtains in many third world countries, especially in Nigeria and other African countries, contrarily to international prescriptions provided for in international conventions. It is because of hardship wage that the Nigeria Labour Congress and the Trade Union Congress declared an indefinite strike on Monday, 3rd June, 2024 in rejection of the N60,000 minimum wage offered by the Federal Government to wage earners. This minimum wage is neither acceptable to the workers nor to the Governors Forum. It is not enough for the workers. It is over bloated and has the potential to make many states become insolvent. It is against this background that an exegesis of minimum wage, a critical issue in international relations, is carried out in order to underscore where the problematic lies.
Minimum Wage Politics
International politics of minimum wage is quite interesting, especially from the perspective of the objectives of the international conventions agreed to. Minimum wage is internationally ‘defined as the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract.’ It is because of the factor of impossibility of reduction of a minimum wage that often makes negotiations between employers and employees difficult and for an agreement to be easily reached.
As provided for in Article 2 (1) of the Minimum Wage Fixing Convention, 1970 Minimum Wage, when agreed to, has force of law and cannot be subject to abatement. Non-compliance with the Convention attracts appropriate penalty and sanctions. Paragraph 2 of the article stipulates that ‘the freedom of collective bargaining shall be fully respected.’ And more importantly, in fixing a minimum wage, certain conditions are to be considered so far as possible. In this regard, Article 3 (a) provides for ‘the needs of workers and their families, taking into account the general level of wages in the country, the cost of living, social security benefits, and the relative living standards of other social groups.’ Article 3(b) also provides for the recognition of ‘economic factors, including the requirements of economic development, levels of productivity and the desirability of attaining and maintaining a high level of employment.’ As good as the need to reckon with the needs of wage earners and economic factors may be, the dependent variant of ‘as far as possible’ necessarily makes a nonsense of Article 3 in its entirety. This cannot but be so because of the conflict between two types of unsustainability: the unsustainable wage at the level of wage earners and unsustainable salary at the level of employers.
For instance, in Nigeria, the labour unions are demanding an increase from the current minimum wage of N30,000 ($20) to a minimum wage of N500,000 ($336) which is difficult for government to consider. Government has proposed N60,000 ($40). Without any jot of doubt, $20 as minimum wage is nothing to write home about in Nigeria where the amount cannot even fill up the petrol tank of a medium-size saloon car. After the first day of strike on June 3rd, negotiations between the Federal Government resumed and the Federal Government offered N62,000, that is, an additional concession of N2 (two) which the labour unions again rejected. Both sides are arguing the same reason of unsustainability for their position: unsustainable salary payment and unsustainable living wage.
Explained differently, one major objective of introducing a minimum wage in labour relations is to ‘protect workers against unduly low pay …, to ensure a just and equitable share of the fruits of progress to all, and (giving) a minimum living wage to all who are employed and in need of such protection.’ For instance, the signatories to the 1928 Minimum Wage Fixing Machinery Convention No. 26 were required to implement minimum wages where ‘no arrangements exist for the effective regulation of wages by collective agreement or otherwise and wages are exceptionally low.’ In other words, the convention is meant to be applied where there are no arrangements for the effective regulation of wages. This simply means that countries can have their own regulations on minimum wage.
Even when States have their own regulations, the minimum international standard is still supposed to be applied. In fact, the spirit of the Minimum Wage Fixing Convention, 1970 (No. 131) instructed on the coverage of ‘all groups of wage earners whose terms of employment are such that coverage would be appropriate.’ As the environmental conditionings of work begin to change, fresh conventions on minimum wages are negotiated. It is against this background that the Minimum Wage Fixing Recommendation, 1970 (No. 135), the Domestic Workers Convention, 2011 (No. 189), as well as other International Labour Organisations (ILO) instruments on wages were negotiated and adopted.
In fact, Article 4 of the Convention allows for time to time review of wages, a review of which representatives of organisations of employers and workers concerned are involved. The article also says that the Convention shall not be regarded as revising any existing Convention. And more notably, the Convention is only binding on the signatories to the Convention that have ratified it. The Convention can still be denounced after ratification, but only after ten years. In this regard, the Convention enters into force twelve months after the date on which ratifications of two Members have been registered with the ILO Director General.
Additionally, for the purposes of evaluating the extent to which the Convention is respected, the Committee of Experts on the Application of Conventions and Recommendations publishes every year a General Survey on Member States’ national law and practice on a subject approved by the Governing Body. The members of the committee are generally of high national and international standing, appointed by the Governing Body on the basis of renewable periods of three years and on the recommendation of its officers and proposal of the Director General. They are also of high moral character. They serve in private capacity and are required to be impartial. In 2002, a limit of 15 years of service was adopted, meaning that an expert cannot serve more than five terms.
It was in 2014 that the General Survey focused attention on the Minimum Wage Systems. It is important to note here that the Committee of Experts is an independent body comprising legal experts given the mandate to examine the application of ILO Conventions and recommendations by ILO Member States. Interestingly, a Nigerian, President of the National Industrial Court of Nigeria and Officer of the Order of the Federal Republic (OFR), Mr. Benedict Bakwaph Kanyip, was appointed a member of the Committee in 2022.
And perhaps most importantly, international labour standard is always defined and redefined in Conventions, Protocols to Conventions and Recommendations, which ILO Member States can choose to ratify or not ratify. However, non-ratification of an ILO Convention or a Protocol does not prevent the ILO from monitoring labour developments in all countries regardless of whether a country has ratified the ILO conventions and protocols.
In this regard, as noted by the www.developmentaid.org, ‘out of 44 Conventions ratified by Nigeria, of which 30 are in force, 4 Conventions have been denounced, 8 instruments abrogated, none have been ratified in the past 12 months.’
Nigeria’s Precarious Federalism
One cardinal objective of Nigeria’s foreign policy, as noted in Nigeria’s 1999 Constitution and as amended, is the respect for international law and treaty obligations. In the spirit of sanctity of agreements therefore, there is no reason why Nigeria, as a signatory to, and having ratified most of the ILO Conventions and Protocols, including the one on Minimum Wage, should be found wanting on the issue of minimum wage. Nigeria is pretty bound to maintain international minimum standard based on economic and developmental needs of wage earners. As the polity in Nigeria is fraught with various societal challenges, many questions cannot but be raised: is the problem of recidivist strike a resultant from economic insolvency or from bad governance? Is the problem that of lack of political will or political chicanery?
These questions are necessary because a panoramic view of political governance in Nigeria clearly suggests that Nigeria is not poor. The recklessness with which public funds are ill-gotten is unbelievable but true. The salary of Members of the National Assembly is very disproportionate with what generally obtains in the civil and public service. Political office holders earn more money than they contribute to national growth and development. They have Special Advisers and Special Assistants than necessary. How many SUVs does a Governor or a Minister have? If the amount of ill-gotten money is expended within the framework of Minimum Wage, there will be more happiness and greater productivity. Workers’ strike may not be much painful as it is today.
From the character of the ongoing negotiations between the Federal Government and the labour unions, there is nothing to suggest any seriousness of purpose at the governmental level, and particularly at the level of the federating States of Nigeria. It should be recalled here that when the Minimum Wage was N30,000 per month, several States in Nigeria purported not to have the means to pay and they never paid. Without doubt, minimum wage can include salary in kind. In spite of this, many of the States claim not to be solvent enough to pay. And now that the Minimum Wage is put at N60,000 which the labour unions rejected and with an additional amount of two naira but still rejected, a special reconsideration of the wage problem has become a desideratum.
In this regard, we observe that it is lack of ‘true’ federalism in Nigeria that is largely responsible for Nigeria’s development setbacks. Simon Kolawole has argued in his article “True Federalism and Other Fallacies,” published on June 12, 2021, that there is nothing like a true federalism in international politics based on his very extensive research on the question of federalism. As he put it, ‘I have done extensive research on federations across the world and I must admit that Nigeria is the only country where the term “true federalism,” is in use. More importantly, Simon Kolawole, a very seasoned academic columnist, said ‘while no two federations are exactly alike, I don’t know of any other country where people are campaigning for ‘true federalism’. Why? Because there is no such thing. True federalism is a complete fallacy, a made-in-Nigeria fantasy. You either run a federal system or not. There is no true or false federalism. Every federal system has its peculiarities and practices.’ This observation is a good hypothesis that raises more questions than answers. This point is made in light of Simon Kolawole’s assumption that, because all other federal systems never talk about ‘true federalism,’ talking about or using the terminology of true federalism cannot but be a fallacy.
Admittedly, every federal system has its peculiarities. By implication, Simon Kolawole is saying, interpretatively, that there is no standard federal system in the world that can be a yardstick for comparison. Every declared federal system is necessarily a federal system without qualification. Without any whiff of doubt, there are many elements of truth in his submission. However, psychology of human differences still allows for disagreement with the submission of Simon Kolawole.
First, federalism can be categorized on the basis of different factors, hence people talk about central and decentral federalism, fiscal federalism, unitary federalism in the mania of Decree 34 under General Aguiyi Ironsi, or federalism in the mania of Switzerland, Canada, etc. Secondly, there is the nature or requirement of fairness, justice in the sharing of national resources in a federal system and equality of stake-holding parties, which Simon Kolawole also rightly raised in his “The Pursuit of true federalism” on July 23, 2017. If we do accept that in a federal system there is operational equality at the levels of government (central or federal, state, local government), any federalism that does not allow for equality cannot be said to be normal. A true federalism cannot but be synonymous with normalcy in this case.
Without equality, the federalism is necessarily false because what is not good for the people cannot be right. There is falsity of federalism when it is detrimental to the interest of the people, when financial governance is predicated on dualism under the same political governance. For instance, no minimum wage is applicable to senior political office holders while it exists for other categories of workers. Security vote is an institutional mechanism for official corruption, because it requires no accountability. State governments appropriating allocations meant for Local Government Councils is an expression of false federalism. Federalisation of minimum wage is an expression of false federalism even if it is called centralized federalism. In a true federal system, every federating unit has right to develop on the basis of its capacity and resource, while admittedly, national currency, foreign policy, defence, etc. can be conceded to the central or federal government. This is true federalism. When the federal government is seized with primary education is states, this is false federalism when it is based on agreement and not imposed.
Perhaps more interestingly, Aderonke Majekodunmi addressed several aspects of the falsity of federalism in Nigeria in her “Federalism in Nigeria: The Past, Current Peril and Future Hopes” (vide www.researchgate.net). She noted that ‘in the aftermath of military rule, Nigeria’s new civilian, democratic federal system is highly centralized while also being fragmented sub-nationally. There is much pressure to reconstitute the federal system, devote powers, provide for a more equitable distribution of natural-resource revenues and other revenues, and use states to advance ethnoreligious identities.’ If there are efforts to reconstitute the federal system, it is because something is wrong with Nigeria’s federalism. We can agree that what is wrong is what Simon Kolawole describes as peculiarities of federalism, but this type of peculiarities is precisely what explains the falsity of federalism. If the operation of a federal system is wrong, then federalism can be right or wrong, true or false within that particular polity without necessarily seeking an international model to relate to.
Additionally, the relevance of the foregoing is not stricto sensu to disagree with Simon Kolawole. He has simply posited that federalism is federalism and should not be qualified. It is precisely because of this type of definition of federalism without qualification that is largely responsible for the recidivist and deepening disagreement between workers and employers. Disagreements can always exist because of changing dynamics of livelihood. However, Nigeria, as a signatory to the ILO Convention on Minimum Wage, owes it a responsibility to ensure that Nigerian workers do not live in hardship or given hardship wage. N62, 000 as minimum wage does not reflect the socio-economic reality of life in Nigeria. About fifty percent of the amount is what is needed for transportation to places of work. House rent, family upkeep, surviving, etc. cannot be covered with the balance. Even if the N105,000 being touted by observers as likely final approval by the Federal Government is approved, the minimum wage can only enable petty loan-taking for survival in the immediate. This only helps to lay a foundation for mutual trust building, enabling vendors of food to accept payments by instalment, while still accumulating the unsettled bills.
In essence, the historiography of federalism has shown admission by several scholars that Nigeria’s federalism is not operated the way it is done in many other countries where political authority is similarly shared. One rationale often referred to, is that Nigeria’s federalism is not a resultant from the pluralities of economic and geographic regions or from ethnic nationalities, but from the imposition of British colonial administrative traditions. In this regard, how should federalism be evolved in the absence of British mainmise? One truth which is the quality of being true, about Nigeria’s federalism is that it is false in design because of its colonial foundation. It is false in the mania of its operationalization. States in Nigeria operate on unequal footing which makes federalism problematic. In fact, Nigeria’s federalism is, at best, precarious and unacceptable. This is why there are calls for restructuring. It is because of the over-centralization of political authority that does not allow the federating units of Nigeria to be directly in charge of the conduct and management of labour affairs. Resultantly, the situation is strengthening misunderstandings between government and workers. Workers in many states of Nigeria should not be compared with their counterparts in Lagos State or Kano State, especially in terms of a state’s internally-generated revenues. A correct and true federalism is one that promotes a better standard of living and self-control at the humanitarian level.
