Opinion: Labour unions and economic reforms in Nigeria

The history of labour unions in Nigeria dates back to 1912 when the Nigeria Civil Service Union, NCSU, was formed. The Nigeria Labour Congress, NLC was however formally constituted in 1978 to continually promote, defend and advance the economic, political and social well-being of Nigerian worker and ever since, they have played a prominent role in the formulation and implementation of government policies.

Labour interventions have mostly come via industrial actions such as the Imoudu led general strike of 1945, Kokori led NUPENG anti-June 12 election annulment strike of 1994, incessant ASUU strikes, and various strike actions against hike in pump price of petrol. The success of the 1945 general strike and subsequent participation of labour leaders in the campaign for independence radicalized and popularized the labour movement.

In the last half-century, dependence on oil revenue and perennial government corruption and incompetence have led to macroeconomic instability and exchange rate volatility, which in turn have had crushing effect on the purchasing power of average Nigerians. Resultantly, labour unions have constantly agitated for increment in wages and in 2011, labour and government agreed on the current N18,000 minimum wage.

The increment put a strain on government finances. For example, the federal government’s wage bill increased from N800bn to ca. N1.8trn. This year alone, government will be spending a whopping N1.71trn — 44% of expected revenue—on salaries of 1.9 million employees. The situation is much worse in states as many of them owe as much as 5 months salaries. Mistake it not; fixing this ailing economy will require painful measures and attitudinal changes.

For starters, labour unions and indeed Nigerians have to do away with this mentality that Nigeria is an oil-rich country. While labour unions are right to always pontificate the obvious waste and corruption in government, the fact remains that Nigeria does not have enough revenue to fund social services and infrastructure development.

Hence, to bridge the $300bn infrastructure deficit, government must partner with the private sector to provide key infrastructures like power, roads, seaports and railways. Whereas government can mobilize taxpayers’ money and debt to provide services for free, the private sector will only partner if investments will be recouped via service cost like highway toll, airport passenger service charge, cost-reflective electricity tariff, etc.

It’s important to quickly add that government has a duty to ensure that these partnerships are mutually beneficial. But like Professor Ricardo Hausmann wrote in a Project Syndicate article, “in any such relationship, all parties want to get the lion’s share of the gain, but some get the short end of the stick. Yet, without the relationship, there would be no stick.” Hence, labour unions must begin to see these partnerships as value-creating opportunities and not as pure exploitation.

Secondly, it’s not the business of government to run business. In 2007, President Yar’Adua forced the cancellation of the privatization of Port Harcourt and Kaduna refineries, and reversed the unbundling of Power Holding Company of Nigeria (PHCN). Labour applauded those decisions but Nigeria is barely better off today. Even though the privatization of power companies is now completed, 4 years was lost.

Heavy government intervention and regulation of business breeds inefficiency and corruption that ultimately inhibits the flow of capitalism and prosperity. Privatization is the only way forward and labour unions will do Nigerians a whole lot of good if they begin to watchdog privatization processes instead of staging flailing protests against commonsense.

Thirdly, it’s important for unions to understand that repression of markets hardly helps the poor. Investments and jobs—that poor people need—don’t come when government fix the price of goods and services or when investors can’t repatriate their profit due to capital and exchange controls or when government officials dictate to the private sector when to hire and fire workers.

Singapore’s preeminent leader, Lee Kuan Yew wrote in his memoir—From Third World To First—that “to attract investments, we had to free unions from communist control and educate union leaders and workers on the need to create jobs by getting investments. This was easier said than done.” Given that President Buhari shares labour’s socialist economic viewpoint, the task of educating union leaders becomes even more difficult.

As basic wages continue to rise in China, low-end manufacturing is beginning to shift to cheaper environments around the world and Asian countries like India, Vietnam and Bangladesh have positioned themselves as preferred destinations. But sub-Saharan Africa countries with its vast energy supplies, manufacturing inputs and abundant cheap unskilled and semi-skilled labour can become a hub for low-end manufacturing.

Without doubt, government has to lead the way by introducing sweeping policy, legal and institutional reforms that makes it easier to do business. But as the private sector expands and drives economic growth, there’s the risk of private sector workers learning the bad practices of public sector unions.

For example, former Governor Fayemi introduced competency tests for teachers in Ekiti State. But all efforts to get them to write the test failed. This kind of attitude must never be allowed to creep into the private sector. Salaries have to be linked with the performance of workers and promotions have to be earned.

Fourthly, government doesn’t exist simply to pay salaries and labour unions can’t continue to pretend that all Nigerians are happy once salaries are paid. In 2013, Nigeria realized ca. N426bn from the sale of power generation and distribution companies but paid N384bn—over ­90% of revenue generated—as severance to ex-workers of PHCN, leaving almost nothing for re-investment in the government controlled transmission sub-sector.

One very important lesson to learn from Greece’s debt crisis is that running an expansive bureaucracy, particularly on commodity revenue or borrowed funds, is unsustainable. Labour unions have a responsibility to keep alive the goose whose golden eggs we all need. Instead of this constant demand for wage increment, unions should begin to demand for a fair society.

A society that provides upward mobility, rewards diligence and personal sacrifices, and ensures that everyone plays by the same set of rules.

Lastly and most importantly, labour unions must understand that there are costs to pay for bad economic policies and postponing such painful remedies only aggravates the pain. Greece and Venezuela are apt examples of how worse things can get when painful reforms are delayed.

Op–ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija

Lanre Asiwaju tweets from @Eni_Iyi1

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