The current N18,000 minimum wage was approved in 2011 when the price of a litre of petrol was around N65. Eight years after and despite rising inflation rate, which has drastically reduced the purchasing power of an average Nigerian, the Federal Government and the labour unions have yet to conclude on the new minimum wage of N30,000.
Despite the inconclusiveness of the new wage, consumers are expected to pay new electricity tariff starting from January 2020. The value added tax is expected to be jerked up from five per cent to 7.5, while the Ahmed Lawan-led Senate is considering a communication services tax that will lead to additional charges on calls, SMS, data and cable TV services. The bill has already passed first reading in the Senate.
But that is not all, Minister of Works and Housing, Mr Babatunde Fashola (SAN), recently hinted that tollgates could soon return to expressways in the country.
However, analysts have said these new policies will make prices of goods and service to soar and affect the quality of life.
This has got some people wondering if President Muhammadu Buhari, who came to power on May 29, 2015 on the promise of change has justified the trust imposed in him. The desperation of the people to see a better government and the promise of a better life helped the then opposition party, the All Progressives Congress, to unseat President Goodluck Jonathan of the Peoples Democratic Party.
Although barely a year into Buhari’s administration, Nigerians began to complain that the new government did not fulfil its promise to offer them a better life. Four years later, Buhari won a re-election. Immediately after the victory, the government that promised to take Nigeria to the next level during the re-election campaigns unfolded some of the packages to shore up the dwindling revenues. The government announced its plan to increase the Value Added Tax from five per cent to 7.5 per cent. Fashola, also hinted that tolling might soon return to some federal roads across the country, among ways being considered to raise money.
Analysts say the new sources of revenue generation being proposed by the Federal Government will certainly drain the already sapped Nigerians more. But what is more worrisome to workers and the Nigerian masses is the reluctance of the same government to start the implementation of the minimum wage from its present N18,000 per month to N30,000, which was reluctantly agreed on with the workers. Based on this, labour unions, including the Nigeria Labour Congress led by Ayuba Wabba, have given a notice of strike which they said would start on October 16.
The Federal Government may likely generate about N261bn a year from the proposed Communications Service Tax when it is passed into law.
The bill, which is sponsored by Senator Ali Ndume from Borno South, aims to charge nine per cent on communication services and pay-per-view TV services. Ndume, while defending the bill said it was a way of getting more from the rich to use same for the development of the country.
He stated that the bill, which had passed the first reading at the Senate, would impose levies on electronic communication services like voice calls, SMS, data usage – both from telecommunication services providers and Internet service providers and pay-per-view TV services.
However, the Association of Licensed Telecommunications Operators of Nigeria through ist chairman, Gbenga Adebayo, has urged the government to reconsider this because of the effects the taxes would have on goods and services.
Also, the President, Association of Telecommunications Companies of Nigeria, Olusola Teniola, also urged the government to consider a reduction in the cost of governance, instead of the communications tax.
But the government has been assuring Nigerians that its policies are the best any government can come up with, saying they were in the best intrests of the majority of the people.
One of those who have reservations about the Federal Government’s new drive for revenue generation is the Vice President of the Nigerian Institute of Training and Development, Mr Ola Azeez.
According to him, Nigerian masses are worse off and suffering untold hardship in recent times than ever before in the history of the country’s existence.
“Ours is a country of imbalances. The rich are getting richer while the poor are continually wallowing in abject poverty and getting poorer. The paradox of our situation is that we are suffering in the midst of plenty due to leadership problem arising from corruption, insensitivity, ethnicity, insincerity and misplaced priorities,” he said.
Azeez described the period of time it was taking the Federal Government to negotiate and agree to fully implement N30,000 minimum wage as ridiculous.
He said, “How much can N30,000 buy? In the face of current economic reality, is the wage really something workers can live on? Yet it has not materialised after endless negotiations and hopes due to bureaucratic bottlenecks and blame game.
“While waiting endlessly for the government to make good of its promise on wage increase, we are confronted with VAT increase from 5 per cent to 7.5 per cent, proposed communications services tax and even reintroduction of tollgates across the country on federal roads.
“What have been the benefits of all these reviews in the past to Nigerian citizens? Will our roads be fixed, infrastructure upgraded, education improved and adequate security guaranteed with all these proposed stringent economic policies? How can we harmonise these with the purchasing power of a worker?
“What an inconsistent and imbalance economic approach? The effect is that the economic power of an average worker will be eroded. All these apparently will compound the myriad of social problems confronting us as a nation. Government should be advised to provide various balanced palliative measures to cushion the effects of the current situation to make life more meaningful for an ordinary Nigerian on the street.”
He, however, commended President Buhari for inaugurating a new economic team while adding that they should be empowered to assist in fixing the country’s economy.
Also, the National President of Nigeria Union of Teacher, Dr Muhammed Idris, told Saturday PUNCH that labour unions were opposed to the planned increment of VAT because of the negative effects it would have the workers and the citizenry.
The NUT president said, “We, as responsible leaders of the labour unions, are against the plans by the Federal Government to increase VAT to 7.5 per cent. Invariably, the issue of consequential adjustment of the new minimum wage has not been concluded.
“Even if it has been concluded, I do not see any reason why the same government will want to take back the money and leave the workers and the masses poorer.
“The issue of VAT and increment in other tariffs, which the Federal Government is planning to do, will not only affect the workers, it will affect the lives of Nigerians. The costs of goods and services have already been jerked up and by the time the adjustment of the new minimum wage starts to take effect, you will that see every aspect of life is going to change.
“Definitely, it will leave Nigerians poorer and that is why we are against it and there is no way we can settle down and fold our hands and watch the government bring further hardship on Nigerians.
“So, we want the Federal Government to rethink its plan to increase VAT, introduce communications tax and tolling on roads.”
Similarly, a professor of economics from the Department of Economics at the Ekiti State University, Awe Ariyo, told Saturday Punch the increment in salary through the new minimum wage would amount to an illusion. He explained that the new minimum wage would have been eaten by inflation before the Federal Government would start its implementation.
He said, “The issue of minimum wage is a very sensitive one but truly speaking, the wages being paid to Nigerians rank among the lowest in the world, even among West African countries. “Labour leaders are agitating for new wages to enhance the purchasing power of workers but the problem with the minimum wage is that it may not even serve the purpose for which it is intended. When you increase minimum wage without corresponding productivity, it will only be inflationary in nature.
“I think a better alternative to this will be to increase productivity so that the prices of goods and services can come down. There is something called ‘money illusion’ and it’s a situation whereby an average salary earner carries the nominal value of money without thinking about what the prices are saying.
“Before the minimum wage will be implemented, the prices of goods and services have skyrocketed and in the next one year, the gain of the minimum wage would have been completely eroded. That is why I am not so enthusiastic about it. We should think about how we can enhance our productivity.
“For the minimum wage to be meaningful, the government must check its inflationary consequences.”
Speaking on the plan to reintroduce tolling on federal roads, Ariyo said it would be okay but advised the government to first fix the roads and make them passable so that motorists would know they enjoy value of whatever they are asked to pay.
He also said it was in order for the government to generate more funds to run the nation but cautioned that taxpayers’ money should not be diverted for personal use.