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EFFECTS OF MINIMUM WAGE IMPLEMENTATION ON WORKERS’ IN THE IMO STATE CIVIL SERVICE OF NIGERIA FROM 1999 TO 2012.

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 CHAPTER ONE

 INTRODUCTION

1.1 Background to the Study

One of the duties of government is to ensure the welfare of her citizens. This was reflected in the attempt made through the legislation of a National Minimum Wage. In this direction, minimum wage laws were first introduced as a way to control the rapid growth of sweatshops in manufacturing industries in Australia. The sweatshops in Australia employed several women and young workers and paid them substandard wages. Given this situation, a minimum wage was proposed as a means to make them pay “reasonably” (Asodike and Atuwokiki, 2012). It was in that light, that the first minimum wage law was enacted by the Government of New Zealand in 1894. Subsequently, another law was enacted by the Victoria State, Australia in 1896. That law established Wage Boards in which workers and employers were represented in equal numbers, with the power to fix minimum wages enforceable on the employer. As such, the law served as a model for the British Trade Board Act 1909 (Nwude, 2012).  Additionally, in the United States, Massachusetts enacted the minimum wage law in 1912. That was the earliest of its kind in the United States and eight other States followed suit the next year (Tinuke, Olusegun and Olanrewaju, 2012).

It was worthy of note that the duration, details and nature of the practice varied from nation to nation. The United States of America and France were among the nations with the longest practice of applying a single national minimum wage. In the same vein, Brazil officially created minimum wage policy in 1936 as a level of earning good enough to provide the satisfaction of the basic needs of a worker. In April 1999, United Kingdom introduced a national minimum wage followed by South Africa in 2002 to support the wages of low-paid workers and newly introduced in China in 2004 to curb wage inequality (Foguel, Ramos and Cameiro, 2010). Based on the foregoing, minimum wage was defined as:

The minimum sum payable to a worker for work performed or services rendered, within a given period, whether calculated on the basis of time or output, which may not be reduced either by individual or collective agreement which is guaranteed by law and which may be fixed in such a way as to cover the minimum needs of the worker and his/her family, in the light of national economic and social conditions (Onuegbu, 2010, p. 3).

From Onuegbu’s statement, we understand that minimum wage is the lowest amount of money paid to a worker which was aimed at meeting the basic needs such as food, clothing, housing, transport and utilities. Be that as it may, the intended objectives of establishing minimum wages were to prevent the exploitation of workers by employers, bridge inequality, promote a fair wage structure, provide a minimum acceptable standard of living for low-paid workers and eventually, alleviate poverty, especially among working families (Rotkowski, 2003).

In Nigeria, the issue of minimum wage had been on for over fifty years but the period covering 1999-2012 is what is relevant to this study. It is significant to note that the first minimum wage was passed into law in 1981, revised in 1990 and in 2000 which led to Minimum Wage Amendment Act 2000 (Ajani, 2011). The Act was reviewed in the light of comparative wage paid to workers in other African nations. Wages of other nations were found to be higher than that of Nigerian counterpart. In order to improve the working condition of civil service, there was wage increase to grant civil servants relief from their inadequate take home (Eme, 2010).

More recently, the Nigerian Labour Congress in 2009/2010 demanded a review of wage upward to N52, 000. This was because the previous minimum wage of N 7,500 for Federal workers and N 6,500 for the State workers respectively was far lower than the minimum cost of providing basic needs of civil servants. This led to series of negotiations by the stakeholders (Trade Union Congress, Nigerian Labour Congress, Federal government and National Employers Consultative Assembly). Twenty states submitted memoranda suggesting an amount they could pay. In March 2011, the stakeholders (Nigeria Labour Congress, Federal government and National Employers Consultative Assembly) ratified a new minimum wage of N18, 000 for the Federal and the State governments as the benchmark (Ochie, 2012). Eventually, the National Assembly passed the minimum wage and in March 2011, President Goodluck Jonathan signed it into law. That gave birth to the new National Minimum Wage Act 2011. Some states consented to start implementation while others were opposed to it until the revenue sharing formula is reviewed (Onuegbu, 2011). Several States paid different wages. Abia State paid N20,100, Enugu State N18,000, Anambra State N18,000 and Ebonyi State N18,000 among others.

In Imo state, the previous minimum wage that took the form of 12% increase based on N6, 500 and subsequent agreement of 25% increase which ended at 15% in 2007, was lower than the minimum cost of providing the basic needs of civil servants and their families (Office of the Head of Service Imo State 2007). Despite that, the State government could not pay workers salary up to date. This was born out of the fact that the Federal Government forced the burden of huge wage bill on the State as it had not consulted the Governors before increasing minimum wages. This subjected civil servants to unnecessary hardship (Akpaekong, 2002). Thus, civil servants could not afford the basic necessities of life such as food, clothing, housing, transport and health care etc.

In an apparent realization that civil servants could no longer survive on what they earned, consequently those who worked also had to support their families who form part of the huge army of the unemployed. In 2011, Governor Rochas Okorocha was the first to promise the implementation of N18, 000 National Minimum Wages. As days went by, civil servants became agitated for the money like the Israelites’ in the wilderness (Eme and Ugwu, 2011)

Surprisingly, the State government turned round to say that the demand of civil servants was most unrealistic in view of the peculiar financial position of the State. The State government claimed that Labour was demanding 90.4% wage increase across board, which would shoot up the State’s wage bill from N2 billion to over N3 billion monthly, if implemented. On 25th September 2011, the stakeholders (Nigerian Labour Congress, Trade Union Congress, and Imo State Joint Public Service Negotiating Council) agreed on 26th September 2011, to work out modalities (develop a salary table with Labour) for the implementation of the new minimum wage of N18, 000 across board (Uwadi, 2012).

Wondering what could have gone wrong, Imo State civil servants were finding it more and more difficult to survive on their monthly salary. This was because the salary of an average civil servant was very low, given the economic situation. Even at that, poverty remained one of the biggest problems facing the State because civil servants could not afford to eat three times daily. This situation was evident in the lives of civil servants who were paid stipends compared to what politicians took home. As such, the wage increase and implementation came with excitement as civil servants felt it was going to improve their purchasing power and thus, reduce the level of poverty and inequality in the State. Instead, there was wide socio-economic gap between the rich and poor which led to unequal access to assets, income and expenditure (Asodike and Atuwokiki, 2012). And as Nigeria Labour Congress (NLC) Campaign and Mobilization Bulletin (2009) puts it, the previous minimum wage of  N6,500 for Imo State workers was far lower than the minimum cost of providing the basic needs of a civil servant and his/her family, even under strict financial management.

In a related comment, the living condition exposed Imo State civil servants to ridicule and economic rancour, with their salaries not able to meet basic needs essential for survival and dwindling diet which their monthly salary could not afford, even half way (Eme, 2010). Perhaps, this informed (Okafor, 2011) to assert that in Imo State, the relative economic benefits or gains civil servants would have derived from their work were denied. This was partly because the labour market was saturated, which led to unemployment. Thus, socio-economic and political environment became hostile, unstable, insecure, unsafe and rancorous. The aim of the civil service was to provide service that would engender the growth of minimum wage implementation, but the consequence was prevalent poverty across several aspects of human society and decline in the quality of work life. It became a pitiable plight that the condition of Imo civil servants deteriorated considerably. This was because the benefits that would have accrued from remunerating civil servants were basically ignored (Ochei, 2012).

One could not but agree that in view of the depressing economic condition in the State (where civil servants are experiencing abject poverty, want and deprivation) which took its toll on the take home of civil servants, in contrast to the salaries and allowances of political office holders, the disparity between the high earners and low earners, Imo State Governor (1999- 2015) promised to pay civil servants N20, 000 minimum wage above the benchmark of N18, 000 National Minimum Wage to motivate civil servants towards productivity and improve the living standard of civil servants. The Governor convincingly stated that the new minimum wage of N18, 000 was inadequate and could not be called a living wage (Yashau, 2011). Reacting to this incidence, the ground shaking ovation that followed the announcement by Governor Rochas Okorocha to pay N20, 000 instead of the canvassed N18, 000, told the story of a civil service that had not witnessed such a lavish salary reception by their number one citizen in the past (Ebere, 2011).

In this direction, the time frame 1999-2012 was chosen because there had been contention on low standard of living. The period of 13 years had only two Minimum Wage Acts (2000 and 2011). The 2000 Act may have contributed in upward trend in price levels which became a source of worry. It was expected that the 2011 Act would improve the situation. Previous studies on minimum wage in Imo State concentrated on its determination, setting and adjustment. Little effort was made to study effect of minimum wage implementation on the welfare of civil servants in Imo State civil service. On that premise, the research was aimed at evaluating the effects of implementation of minimum wage on civil servants in Imo State civil service 1999-2012.

1.2       Statement of the Problem

The issue of minimum wage has been a contentious one. (Alanaeme and Alor, 2010) posited that from 1999 to 2008, the contention was always premised on low standard of living and how to improve the workers’ living standard. Thus, (Odunuga, 1999) also argued that former President Abdulsalami Abubarkar promised a wage increase in 1998. Surprisingly, in 1999, the decision was reversed following an excuse that the oil revenue dwindled. That was when Okonkwo (2000) argued that the battle for decent wage for Imo State workers under former President Olusegun Obasanjo’s era was overshadowed by skirmishes.  The Nigeria Labour Congress demanded for a minimum wage of N20, 000 while the Government proposed a minimum wage of N5, 000. However, the negotiation ended on N7, 500 per month. Affirming this view, (Eroke, 2011) explained that the contention was that the N6, 500 for state minimum wage fixed in 2001 could no longer carter for the needs of workers in relation to the then economic situation.

Another issue of contention according to (Ebonugwu and Ajaero, 2000) was the non-consultation of the Governors who refused to bow to pressure from labour on wage increase. This heightened the controversy. To buttress this view, (Sawyer, 2011) observed that particularly in 2007, there was controversy when the demand won by workers for 25% increase was arbitrarily cut down to 15%. More so, on the implementation date, the Joint Negotiating Council (JNC) wanted January 2007, the States wanted January 2008 and the Government wanted a repeal of the wage. Beyond this incidence, (Eroke, 2011) argued that in May 2009, the Tripartite Committee went into negotiation and agreed on a benchmark of N18, 000 minimum wages through the Alpha Belgore Committee. It was endorsed by the Council of States and signed into law in March 2011. Many felt that the minimum wage debacle had been laid to rest. However, the delay in the implementation by the State Governors made it to assume another dimension. The Nigerian Governors Forum contended that their revenue could not cover the minimum wage. Furthermore, the workforce was less than 25% of the total population and the Government was irrational to allow a small percentage of the population to be the hands of development in the states. On that premise, (Akanbi, 2011) explained that most governors hinged their position on review of the existing revenue sharing formula, because it is not commensurate with the challenges posed by the minimum wage structure. Throwing more light on this, (Anuku, 2011) argued that it became more contentious when the Federal Government decided to implement the minimum wage of civil servants in lower wage bracket (level 01-06) and deferred the payment of other categories (levels 07-17) to January 2012.

Despite that, (Tinuke, Olusegun and Olanrewaju, 2012) posited that the challenges to minimum wage implementation in Imo State were on enforcement of the Act, corruption, poverty, inequality, and inflation. In addition, the Government was tempted to resort to quick fix strategies such as non payment across board, effective date was not kept, staggered salary arrears and allowances etc (Salihu, 2011). That assertion lent credence to what Iheriohanma (2009) depicted as the continued high poverty indices recorded among Imo State civil servants which indicated their inability to attain development in target times. In a similar view, (Ugbaja, 2001) explained that the protracted economic downturn led to retarded economic growth and aggravated unemployment in Imo State. Again, in Imo State particularly, people were subjected to immense hardship; ordinary citizens were experiencing abject poverty, want and deprivation. There was hunger and anger in the land. Civil servants, who were working, were equally emasculated. There was poor health care, low standard of education, high cost of transportation and low productivity.

Some of these challenges caused by the state of the implementation of minimum wage in Imo State were evaluated to ascertain the effects of the implementation of minimum wage on civil servants in the Imo State civil service. On that premise, an attempt was made to provide answers to the following questions:

  1. What are the implementation strategies of minimum wage on workers’ well-being in Imo State civil service?
  2. How has the implementation of minimum wage helped to improve the well-being of workers’ in Imo State civil service?
  • What are the problems that militate against the implementation of minimum wage on workers’ well-being in Imo State civil service?

1.3       Objectives of the Study

The general objective of the study was to evaluate the effects of the implementation of minimum wage on civil servants in the Imo State civil service of Nigeria. The specific objectives were to:

  1. Examine the implementation strategies of minimum wage on workers’ well-being in Imo State civil service
  2. Investigate the extent to which implementation of minimum wage has helped in improving the well-being of workers’ in Imo State civil service.
  • Find out the problems militating against the implementation of minimum wage on workers’ well-being in Imo State civil service.

1.4       Significance of the Study

The research has both theoretical and empirical significance. Theoretically, the result of the research would provide an alternative theoretical explanation to the crisis of minimum wage in Imo State. The study would seek to contribute to the existing body of knowledge on the subject matter evaluation of the implementation of minimum wage in Imo State civil service. The research would help in examining and pushing further the academic frontiers as it related to the implementation of minimum wage. Ultimately, it would close the already existing gap in the extant literature.

Empirically, the research would provide a clearer understanding of the problems of minimum wage implementation in Imo State geared towards teaching Nigerian present and future leaders how to cope with the task of nation building. It would also substantiate or disprove minimum wage implementation as a useful and effective means towards achieving a high standard of living among civil servants. The study would proffer solutions to the problems of minimum wage implementation in Imo State and Nigeria in general. It would critically bring about an in-depth public understanding and awareness as to the debilitating factors which had made it difficult, if not impossible for Imo State to have a high standard of living. It would also help to expose those factors that hinder the effective implementation of minimum wage in Imo State. That would help to reduce industrial disharmony within the organization. When those factors that hindered effective implementation of minimum wage are spotted out, it would assist the policy analysts, policy makers, bureaucrats, administrators, and political leaders among others in taking decisions on matters that had to do with minimum wage setting, adjustment and implementation. It would also reduce what the Government would lose in terms of resources under industrial conflict. The result of the research would be essential to human resource management because it would serve as a significant input to productivity. It would also aid decision makers to determine how to improve the well-being of the civil servants.

The study would benefit entrepreneurs, employers of labour because they would use the product of the research as a reference point geared towards working for effective productivity in their organization. The findings of this study would serve as a medium for providing the statutory arrangement needed to end the lop-sidedness of minimum wage and as a deliberate political strategy for ensuring that civil servants in Imo State are better remunerated.

1.5   Scope and Limitations of the Study

        Scope

Imo State Civil Service 1999 to 2012 was selected for this research. That was because civil service is the largest employer of salaried workers who felt the pinch of minimum wage implementation.  Besides, it was a period civil servants started earning a better salary under the democratic dispensation of Nigeria immediately after the military rule. In addition, Imo State Government 2011 to 2012 took a step further to announce a higher minimum wage above the Federal Government National Minimum Wage benchmark of N18, 000. The study focused on management, senior and junior civil servants in all the ministries within Imo State because it will give a high statistical precision.

The reason for the choice of a time-frame (1999-2012) was that there had been two minimum wage Acts (2000 and 2011) within the period of 13 years (1999-2012). The 2000 minimum wage Act was based on comparative wage paid to other African nations. That resulted in upward trend in price levels. In the light of that, there was a feeling that civil servants were poorly remunerated. The standard of living of civil servants became a source of worry. However, it was expected that the 2011 minimum wage Act would improve the situation. On that premise, the period was selected to evaluate the effect of the implementation of minimum wage on civil servants in the Imo State civil service of Nigeria, from 1999 to 2012.

 

 

Limitations

The research was constrained by the reluctance of workers to give information (such as population size) except on the instruction of their superior (Director). This subjected the researcher to repeated visits to the ministries. Some of them were putting up a disposition of importance and being busy; thereby, making it difficult for the researcher to collect the needed data.

Most labour union members were not permanently in their offices except when they had meetings. They were not on full time employment of labour. This became a constraint because meeting them for interview was a difficult task.

Some of the respondents had to keep the questionnaire for days before giving it attention. As a result of that, the researcher embarked on repeated unscheduled visits.

All these were sources of discouragement on the part of the researcher.  However, an indirect means was used such as liaising with the staff of the Imo State Labour Congress, Newspaper houses, Imo State Ministries to pull out relevant materials that took time to sort out. In spite of all the limitations, the research was able to achieve its objective.

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