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A misguided union

Organised labour is one of the biggest problems with Nigeria. The reason is very simple. It is because like the vast majority of us unfortunately, they lack the ability to engage their brains.

Last week, our labour unions caused a lot of chaos by pulling out of a warning strike at the very last minute. The strike pull-out caused a yet to be determined loss to the economy, and you can bet that no one in this country is going to sit down and calculate just how much the abortive strike cost us. You see, on the day before the aborted strike, a lot of people left work earlier than usual in order to prepare; and given that the strike was called off at an unholy hour, a lot of people trudged to work very late. A lot of man-hours were lost.

Labour went on this comedy show in order to press home their demands for the implementation of the new minimum wage, N18,000, which was signed into law on March 23. The strike was aborted because the government agreed to pay the new wage starting from next month. The government agreed to obey a law which they signed.

Let's look at the issue of this sum in question...

At the recent average exchange rate of NGN150 to USD1, NGN18,000 is USD120, or just above US$4 a day. This is borderline poverty, especially in a country where people have a lot of unnecessary expenditures each day (think diesel or petrol for their generators). So why are they fighting, and worse, why were they prepared to ground the economy, for a few miserly dollars?

For the records, the focus on the actual amount is rather unintelligent. You see, whether we realise it or not, the United States Dollar (USD), not the Nigerian Naira (NGN) is our defacto currency. The global commodity markets use the USD as the currency of trade, and Nigeria is a commodity seller simple and short. The one commodity we trade in above all else, is oil. As a result, our budget is heavily dependent on the price of oil, and our reserves are held entirely in USD. Back in 2008, former Central Bank of Nigeria governor, Charles Soludo, announced a plan to diversify the reserves, but to my knowledge, nothing has changed.

How does this affect the minimum wage? Let us assume Mr. Abdulrahman Bello, a messenger in the Nasarawa State Ministry of Special Duties is paid NGN18,000 a month. What happens essentially is that he is paid after the country has made a USD withdrawal from the federation account, and the money is converted, then deposited into his account. Essentially, his salary was first withdrawn, then converted, before being paid in. Now consider if the conversion ratio is adjusted in favour of the USD to say USD1 equals NGN180, Bello's pay would have dropped to USD100 per month, but NGN18,000 would still hit his account. 

Of course, following such a devaluation, every other thing around Bello would rise in cost especially when you consider that we import every damned thing into the country. So, he would for a while live in the euphoria that he is earning more, but in reality he is earning less, or paying more, or both.

That is the reason why each wage increase in Nigeria has always been followed by inflation. Yet, our labour unions tout wage increases as the solution to our myriad problems rather than engage the government in order to improve productivity.