A conversation on the Kwara minimum wage

THIS is the moment for hard truth and sober reflection. On Tuesday, October 6, 2020, a local blog published a screenshot of a story it had published on May 20, 2019, accompanied with a video footage of protesting pensioners and players at the Kwara United FC. In that footage, the protesters said their backlogs of salaries had not been paid since 2013. The same blog then captured how the new administration has commenced the payment of these salary arrears and sign-on fees of the players and officials of the club.

These backlogs of salary, pensions and gratuities are not limited to the football club. It is a rule, not an exception, across several MDAs in the state. In the local government system alone, no less than N21bn is owed to pensioners. The arrears in the LG system for active workers is in excess of N6bn. Across the state MDAs, thousands of workers are owed outstanding of promotion arrears. Thousands got promoted and are on grade levels without commensurate pay. It is a debt on the state. Some have been on the same grade level for years without promotion, partly because promotion normally comes with the burden of backing it with pay rise. Promotion is a legitimate aspiration for workers.

At the level of the local government, the wage bill and other statutory payments, which stands at N2.5bn as at September ending, is 91% percentage of their total receipts from the Federal Government. This does not include other expenses. When added, those expenses bring the wage bill to between 100% or 108% of their federal allocation. This (N2.5bn) wage bill, to be sure, is pegged to the N18, 000 minimum wage.  It will rise to roughly N2.9bn when the new minimum wage is implemented (depending on what the labour and the government eventually agree to).

The question has always been where to get the difference between what is earned as allocation (an average of N2.6bn, including their 10% share of the IGR) and the balance with which to pay the minimum wage. If we assume that allocation may indeed rise to N2.9bn to allow for payment of the minimum wage, does it mean that all that is done at the LGAs is payment of salary? What happens to infrastructural development?

You may ask, what about their IGR? Between 2019 and date, the total IGR  collected by KWIRS (Citizenships, Radio license, tenement rate and signage) on behalf of all the 16 local governments stands at N78.9m as of June 2020.

Reality check: this calculation does not provide for promotion. What that means is that no worker can substantially move up the ladder as they ought to. Every worker dreams to rise through the ladder to the highest echelon of their profession. But the Kwara workforce is too bloated to allow for free, legitimate movement. It is a double tragedy for the state and the workforce, really. But it is the reality.

Bloated civil service is a lose-lose for all: the employees and the employers. The employers would have to spend almost everything on the workforce while the employees would often time not get what is due to them. Often, three employees may earn what one employee ought to earn because the employers simply cannot afford more, except they want to borrow for consumption. No serious government does that. Ultimately, the employees are the greater losers because they are unable to meet up with basic challenges of life. For no fault of theirs, the hard working type may forever have unfulfilled working life.

This takes us to the next phase of the conversation: how did we get here? What were the yardsticks for recruiting people into the public sector? Were there any needs assessment that warranted the numbers we have now? There are very brilliant and hardworking civil servants across the MDAs in Kwara. But are these eggheads in the majority today? How did we employ senior civil servants who cannot write good memos or design proposals? What yardsticks did we employ to recruit a teacher who cannot write a simple sentence or communicate in the language of instruction? The truth, as any sincere mind could tell, is that the Kwara civil service was designed in the recent years as a reward system for loyalists of the ousted dynasty. People got appointment often without writing any examination or attending any interview that tested their suitability for the job. The education sector was not spared. Some chaps once told me in Twitter DM how they got employed as sunset workers (teachers). Their parents got the slots from their friends in government. While headhunting may not always be a crime, it is not a licence to load the workforce with persons that cannot do the job. It is not a licence to give free meal ticket to friends and cronies without commensurate benefits to the system that pays the bill.

Now the situation is dire. Labour wants the minimum wage implemented. It is their right. Workers need decent wage. But can the system afford it as it is? If it does, what suffers for it? Most likely infrastructural development that serve 99 per cent of the public. If that happens, what is the future of the state including the civil servants who have children who would call Kwara their state? For Kwara to pay minimum wage at the local government level, especially the consequential increment, they would spend 107 per cent of their total monthly receipts from the federal government for just workers’ salary. As noted above, this does not include other expenses.

The situation is not so better at the state level. Currently, 71 per cent of the entire FAAC receipts goes into paying salaries of workers. This does not include the cost of running government and allocations to the MDAs. In September, Kwara got N4bn as allocation. But that is half the story. The allocation went up because the federal government has suspended full payment of loans until April next year. This means allocation would dip when full repayment resumes. Also, deductions for foreign loans, which the government inherited, have now risen by almost 61.9% (from N39.6m to N64.1m monthly) because of the recent devaluation of the naira.

The minimum wage table being debated between the labour and government will add N263m to the current wage bill of the state government. If this sails through, it means Kwara will now spend 79% of its total FAAC receipts on average to pay workers alone. What about the IGR? The spendable part of the state IGR is around N600m. What is left of the IGR are akin to revolving funds, such as receipts from hospitals or tertiary schools (school fee) and so on which go back to them to keep them afloat. But, again, how much should a state like Kwara spend on wage bill? For those who want government to run like business so that public can get value for their money, which business spends 79% of its earnings to pay wages alone?

This is the Kwara story. As things stand, both the government and the labour have tough decisions to make for the future of the state. No side holds the ace. If the Governor inks the minimum wage agreement today, it is clear that the local government cannot afford it. The way out is to borrow to pay. Or the state piles up arrears of unpaid salary in the coming months. Should we do that? If the state inks any agreement that adds N263m to the wage bill, the consequence is glaring for infrastructural development.

The government, for its part, appears to be trying to rev up its revenue without imposing more burdens on the stressed populace. But the facts are clear: businesses in post-COVID-19 are struggling to survive and must be so treated. Similarly, the government is carrying out reforms in the civil service without sacking workers. Investments would come with steady allocation of resources to infrastructural development to open up the state while reforms designed to ease the business climate are ongoing.

  • Dr Ajia, a former university teacher and publishing executive, is a public policy analyst based in Ilorin.

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