Opinion: Affording minimum wages – By MINABERE IBELEMA
Sometimes coincidences draw attention to life’s gross inequities. So it has been with the parallel debate in the Nigeria and the United States over minimum wages. Remarkably, the arguments tend to be the same. Advocates for workers point to the need for “living wages,” as it is referred to in the US. Spokespeople for employers complain that they can’t afford higher wages.
The parallel ends when one begins to compare the amounts at issue. The current federal minimum wage in the US is $7.25 per hour. Given that the approximate work hours per month for fulltime employees is 160 hours, this translates into a monthly salary of $1,160. An average worker in Nigeria would salivate at this amount, as it converts to about N406,000 (with a $1 to N350conversion rate).
Yet, impressive as this would be to an average Nigerian, it is hardly a living wage in most places in the United States. In New York, for example, it is not enough to pay the monthly rent for a decent one-bedroom flat. Accordingly, many states and municipalities mandate minimum wages beyond the federal benchmark. Yet there is constant pressure by labour unions and political advocates to increase the base pay.
Businesses with large numbers of employees are particular targets of such pressure. When their base pay is low, it depresses incomes overall and when it is raised, it forces other employers to keep up.
It was under such pressure that two of America’s largest retailers, Walmart and Amazon, recently hiked their minimum wages to $11 and $15 per hour, respectively. You don’t have to do the maths to get a sense of what this would mean in naira terms. But if you have to know, it is N616, 000 and N840,000 per month, respectively.
This contrasts cruelly with the minimum wage amounts being debated in Nigeria. At this time, it is N18, 000 per month and labour is pressuring for an increase of up to N30, 000. Alas, many state governors have complained that they can’t even meet up the N18, 000 rate.
“But, the problem of state is the capacity to pay what is agreed. As we are talking today, we are (still) struggling with N18, 000,” Abdulaziz Yari, the Governor of Zamfara State and Chairman of the Nigeria Governors’ Forum recently told the press. “Some of the states are paying 35 per cent, some 50 per cent and still some states have salary arrears…. So, it is not about only reviewing it but how we are going to get the resources to cater for it.”
The governors’ case is one that all but the filthy rich have grappled with in the personal realm. Who has not at some point or another said, “This would be nice, but I can’t afford it.” But then, there is also the matter of priorities. In such personal circumstances, people weigh the importance of what is at stake and make some hard choices. Sometimes, it means giving up some frills in one’s life. Sometimes, it entails giving up important but relatively expendable things.
For the federal, state and local governments, the pertinent questions then are: Where does minimum wage rank in the order of priorities? If it ranks high, what current expenditures are expendable to make room for the current and higher minimum wages?
The answers shouldn’t be matters of conjectures, ideologies and politics. They can be mathematically determined. We can compare the salaries of Nigerian leaders with those in the developed world and do the same with the respective minimum wages to see how they stack up.
Let’s take a good example: national legislators. Members of the US Congress (both House and Senate) earn $174,000 per year, which converts to about N61 million. According to an estimate by AfricaCheck.org, Nigerian senators earn about N12.9, when various allowances are added. The difference is substantial. However, as a ratio, Nigerian senators’ salary is much closer to that of their American colleagues compared to that of minimum-wage earners.
US senators earn 4.7 times the salary of Nigerian senators. But the U.S. federal minimum wage (N406,000 per month) is 22.5 times Nigeria’s N18,000 monthly minimum wage, which some governors say they can’t afford. I have little doubt there will be similar discrepancies when the salaries of other elite personnel are compared. The gap in the ratios is a reasonable indication of the priority of minimum wages.
By the way, the figures on Nigerian legislators’ pay don’t include additional perks for housing, furniture, cars, send-off, all of which are paid every four years. That is, except for the pay for sendoffs, which are just for departing legislatures. Why anybody needs to replace cars and furniture every four years is something only the policymakers can justify.
The implications of the discrepancy loom even larger when we consider the bloated bureaucracies. There are 36 ministries and ministers of state at the federal level. President Muhammadu Buhari said he would have slashed the number (42 under the Jonathan administration) but for the constitutionally mandated representation of all states in the cabinet.
It is a requirement that makes sense in light of Buhari’s strong preference for his own. Even then, it is a wasteful policy that bears revisiting. Most presidents are a lot more equitable with appointments than what we’ve seen in the past three years.
Several ministries can be merged and some jettisoned entirely. The separation of petroleum and solid minerals, for example, is quite superficial. And so are finance and budget/national planning. And other than their appeal as political gestures, one is hard pressed to see why the roles of the ministries of women, youth, and the Niger Delta cannot be assigned to other ministries.
Perhaps, one of the roles that Peter Obi will play in the prospective administration of Atiku Abubakar would be as the czar of financial prudence. In such a role, he would have the power to identify, recommend action, and publicize all instances of wasteful expenditures.
It is entirely possible that a N30, 000 monthly minimum wage will become easily affordable. Punch
