Nigeria’s trade unions earlier this week went on a nationwide strike, shutting down the country’s power grid and disrupting flights as they resorted to drastic measures to press the government to hike minimum wages amid a cost of living crisis.
The labour unions suspended the indefinite strike on Tuesday after government officials invited them for negotiations as the industrial action affected power supply for the country’s 200 million people and stranded thousands due to flight cancellations.
The talks so far have not yielded results. “They’ve not presented anything [new] yet,” Festus Osifo, one of the unions’ leaders, told journalists on Thursday. Labour leaders have promised to again force another shutdown from next week if the government does not agree to a minimum wage.
So what are the sticking points in the talks between the government and trade unions as a new strike deadline looms?
What happened and what are the demands?
On Monday, two of Nigeria’s leading labour unions – the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) – jointly declared nationwide industrial action. Labour officials, for the first time in Nigeria’s long history of strikes, went to substations housing the country’s electricity grids, chased workers home, and cut off power supply nationwide.
All airports, including two international ones, were shuttered. Workplaces and schools were closed and health services were disrupted. Crude oil production – Nigeria’s bread and butter – was also paralysed, likely amounting to a loss of millions of dollars.
For months, the labour unions – which represent government workers and employees in medium-to-large companies, had been demanding a minimum wage increase to compensate for the spike in inflation.
The unions want the current minimum monthly wage of 30,000 naira ($20) to be increased to nearly 500,000 naira ($336) – representing a 1,500 percent increase.
The government has offered 60,000 naira ($40).
Although government negotiators called the minimum wage increment “unreasonable”, labour leaders have justified the new amount. They say it is based on the current costs of an average family of six, and that the total is impacted by the current record inflation in Africa’s biggest economy.
Reforms initiated by President Bola Ahmed Tinubu last year, including the devaluation of Nigeria’s currency, have caused inflation to skyrocket, worsening a cost of living crisis in Africa’s most populous nation.
Monday’s strike came after months-long negotiations collapsed in mid-May.
Why is Nigeria going through a cost of living crisis?
It’s the fourth time Nigerian workers have been striking since May last year when President Tinubu was first elected. Last August, resident doctors demanding better pay went on a three-week strike that ravaged the public health sector.
Although Nigeria is Africa’s biggest economy and oil producer, decades of poor governance and corruption have drained the country’s coffers. Nearly two-thirds of the population lives on less than $2 a day.
Under Tinubu’s administration, however, the country has experienced one of its worst cost of living crises ever as prices of food, transportation and rent have tripled within the past year.
A 50kg (110lb) bag of rice, a Nigerian staple, cost about 40,000 naira ($27) in 2023 but has hit about 100,000 naira ($67) this year. At 40 percent, the present food inflation rate is among the worst the country has seen in decades.
Desperate, some have been forced to buy animal feed-quality grains while others are simply eating fewer meals. In one case, a mob attacked a commercial food-laden truck, ripping its contents in broad daylight.
Economists say the country’s woes are largely due to the poor performance of the naira against the US dollar. Because past governments failed to boost local production, Nigeria is import-dependent and particularly vulnerable to external shocks.
Insecurity in the country’s north, where armed groups operate, has also hampered farming there and contributed to rising costs. The central bank under previous President Muhammadu Buhari, in addition, flooded the market with cash, adding to the naira’s problems.
Did President Tinubu worsen the situation?
In his campaign promises last year, Tinubu promised to stabilise the currency and revitalise the ailing economy. But new monetary policies the president implemented on day one exacerbated the issues and led to the naira losing 60 percent of its value by February, analysts say.
The policies included an abrupt removal of costly, decades-long fuel subsidies which past governments said were costly and not sustainable. In addition, Tinubu has devalued the naira twice, merging official and black market rates in attempts to attract more foreign investment. But gains have been slow, and the resulting inflation has choked the economy.
“It’s not accurate to lay all the blame at the door of the Tinubu administration,” Oluseyi Awojulugbe, senior analyst with think tank SBM Intelligence pointed out, noting that the president inherited a sputtering economy. But Tinubu’s blame was for failing to mitigate the expected fall-outs of the reforms.
“They went ahead with these policies without putting in place a social security net that would cushion the effect. The government could have given a wage bonus [or] granted farmers facing high fertiliser costs some subsidies,” she said.
Government reports in recent weeks have touted a brief rebound of the naira as signs that the measures paid off, pointing out that foreign investment has increased. But, Awojulugbe said, only short-term investments have gone up, with investors still too unsure to commit long-term.
“You can’t build your country on what economists call ‘hot money’,” she said. “What Nigeria needs is patient capital – long-term investments that would allow more businesses to flourish and more people to be employed.”
What has the government said?
Officials had initially resisted the unions’ demands and said they would not go above their proposed 60,000 naira ($39).
The unions’ demand would push the government’s wage spending by 9.5 trillion naira ($6.1bn), government negotiators said. Information Minister Mohammed Idris Malagi said that it was capable of “destabilising the economy” although some analysts point out Nigeria’s political class is over-pampered and overpaid, with parliament members earning about three times as much as parliament members in the United States.
Following the grid shutdown on Monday, government negotiators quickly reconvened talks with labour leaders and committed to a minimum wage that’s “over” 60,000 naira. It’s unclear just how much over authorities are willing to go.
Meanwhile, Senate President Godswill Akpabio, speaking in parliament on Tuesday, scolded the union leaders and said the strike action amounted to “economic sabotage”.
Some members of parliament also moved the motion that “extreme” action like shutting down the electricity supply should be criminalised. One MP said he was sure “a lot of people died” in shuttered hospitals over the two days of the strike.
The grid has itself collapsed due to poor management at least three times this year.
What’s next?
For the next three or so days, union leaders will meet daily with with government negotiators who are racing to submit a final template for President Tinubu’s approval within the one-week deadline. Progress appears to be slow as actual figures have not been discussed yet, labour leaders said.
Barring a conclusion that’s acceptable to the unions, workers are likely to strike again from next week.
Update: One Week Ultimatum, They have not presented any different thing yet. FG show Workings ooO! no be to dey yarn cho! cho! cho! One week is at the corner already. #We DEMAND A LIVING WAGE NOW! pic.twitter.com/TrPYjSq7Ka
— Nigeria Labour Congress HQ (@NLCHeadquarters) June 6, 2024
There are speculations in local media that the unions are willing to lock down a deal at 100,000 naira ($67).
Is that an ideal figure for Nigerians living through a tough time? Analyst Awojulugbe said that’s a tricky question. Private companies, which employ the bulk of Nigeria’s 60 million working population, might struggle to pay a higher wage, she said, and some state governments are still struggling to pay the current minimum.
Besides, more cash flow could also work against a central bank that’s frantically trying to mop up excess cash and tackle inflation, she also noted.
Instead, many analysts have said, the unions should be forcing the government to take more measures to force down inflation holistically, rather than push for higher wages. For the government, it’s a catch-22, as it seems set to implement a policy that could pressure Tinubu’s reforms.
“Whatever wage is agreed, it will put more cash in the hands of Nigerian workers and we all know what happens when you have too much cash chasing too few goods,” Awojulugbe said.
“The resulting inflation will mean there’ll be another need to review the minimum wage again. And so the cycle continues,” she said.
