by Ijeoma Nwogwugwu
…what should preoccupy the NLC is how the federal government can cut its wage bill without causing social upheavals and throwing more people into the labour market
My biggest problem with the labour movement in Nigeria is that it is prone to playing to the gallery. Even when some of its leaders are abreast of the problems of this country, their preference is to choose the popular but costlier route. A case in point is the Nigeria Labour Congress’ recent admonition of the central bank governor, Sanusi Lamido Sanusi and its call for his sack.
Labour’s grouse arose from Sanusi’s temerity for telling the truth. Sanusi had at a capital market conference called for a 50 per cent reduction of civil servants, blaming personnel cost for taking the lion share of recurrent expenditure of the federal budget. He said the federal government’s propensity for spending a large chunk of the recurrent budget on salaries, entitlements and pensions of civil servants was hampering its ability to deploy more resources to capital projects, which, mind you, actually help to create more jobs.
In response to Sanusi prognosis, the NLC called for Sanusi’s head and drew attention to the pervasive corruption is the country, which it said should be blamed for the government’s inability to allocate more resources to capital projects. But the NLC, as usual, misses the point, as it is erroneous to blame corruption and leakages on top government functionaries alone. Corruption is more widespread in the public sector where a thousand and one agencies of government and the people who man them bleed the system dry on a daily.
In a three part series on the cost of governance by this column more than a year ago, I pointed out that since the resumption of democracy in 1999, instead of growing smaller, the federal government has grown into a frightening behemoth that is snuffling the life out of the Nigerian economy. In yet another article early this year on the need for the federal government to be more prudent in its spending, this column wrote: “The over-bloated size of the federal government and the penchant by the legislature through its legislations to create even more departments and agencies of government that eventually overlap, in terms of functions, and conflict with existing MDAs (ministries, department and agencies). Not only do these MDAs contribute to an inefficient government bureaucracy, they are a drain on public funds and are cesspits of corruption, resulting in over-inflated government contracts, loss of value for money, and vandalism of public property.
For instance, the Federal Ministry of Health alone boasts 77 agencies and departments under it; the Ministry of Science and Technology has 40; Education – 41; Agriculture – 44; and Power and Steel – 27 agencies, among many others. Most of these parastatals, more or less, perform the same functions. Yet the National Assembly continues to legislate on the establishment of new ones and even larger bureaucracies, instead of amending existing laws to empower the available MDAs to undertake more functions. …It must be added that most of these needless MDAs are over-staffed by public servants who contribute minimally to the economic well being of this nation and add to the astronomical wage bill in the public sector.”
A month later, a more detailed assessment of the public sector’s wage bill in the 2012 budget was diagnosed in this same column as follows: “Since the recurrent budget comprises personnel cost (salaries), pensions, overheads, service wide votes (including MYTO) and debt-service payments totalling N3.031 trillion, this means that the federal government’s personnel cost of N1.655 trillion will account for 54 per cent of total recurrent expenditure while the same personnel cost will account for 86.4 per cent of non-debt recurrent expenditure in 2012.
It should be noted, however, that these estimates do not take into consideration personnel cost that will be incurred by public sector institutions that are entitled to statutory transfers as provided by the constitution. These include the National Judicial Commission, Independent National Electoral Commission, the National Assembly, Niger Delta Development Commission and Universal Basic Education Commission. If we factor them into the equation, the federal government’s wage bill will inch up to N2 trillion in 2012. This is humongous, and I believe is where more attention needs to be paid by the government and anyone interested in reducing the cost of governance.
Between 2005 and 2007, a conscious effort was made by the administration of President Olusegun Obasanjo to rationalise the public sector, during which almost 100,000 public sector workers were let go. Unfortunately, between 2008 and 2011, a lot of these public servants were smuggled back into the pay roll after they had been paid their terminal benefits, a fact attested to recently by the Finance Minister and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala.
Another factor that led to the hike in the payroll of the federal government was the increase in salaries of university lecturers and medical personnel between 2009 and 2010, which was followed by the passage of the minimum wage legislation in 2011. This coupled with the creation of new departments and agencies of government through acts of the National Assembly have all helped to increase the wage bill to frighteningly unsustainable levels.”
From the above, what should preoccupy the NLC is how the federal government can cut its wage bill without causing social upheavals and throwing more people into the labour market, it will also be counter-productive to resort to slash and burn cuts of public sector workers that could lead to unintended consequences in the long run.
The unions in this country tend to get emotive over the removal or sustenance of fuel subsidies, but the same degree of passion and healthy discourse on the wage bill, especially by the unions, has been absent. In fact, I find it rather ironic that everyone agrees on the need to divert more resources to infrastructure development for electricity, roads, water, refineries, etc, but few acknowledge that one of the major impediments to this is the size of the federal government’s wage bill.
A way out is for the federal government to continue to adopt measures to wean out ghost workers in the public sector through the use of biometrics. Another measure is for the federal government to undertake a diagnostic assessment of its parastatals that are unproductive, with the aim of rationalising and consolidating a lot of these MDAs. I believe that has already been done by the Orasonye committee on the rationalisation of the public sector. However, concerns remain that if care is not taken, the process of rationalisation could be politicised and stalled by vested interests wanting to mark their territories and retain the status quo. To prevent this from happening, the presidency, especially, would need the political will to see this through.
A third way is for the federal government to prune the number of political appointees in the public sector, starting from the presidency to the numerous aides appointed by heads of the MDAs. This should also be extended to the disbanding of numerous needless committees in the public sector that meet endlessly, submit reports that are not implemented, and yet get paid sitting, transportation and accommodation allowances for work that is largely ignored by civil servants.
Finally, a review of arcane public service rules would also have to be undertaken, so that workers, who might have been let go from the system, do not get reabsorbed through the loopholes inherent in the public sector.
But let no one be under any illusion. Reform measures of this nature that could ultimately reduce the wage bill will not be easy to execute. Neither can they be implemented by the mere stroke of the pen. They must be carried out in a manner that is sustainable, justifiable, and are backed by adequate safety nets that will help to absorb the pain of job losses. Failure to be measured and methodical will attract the same backlash and politicisation that the fuel subsidy removal saga unleashed.
Read more Behind the Figures here.