Nigeria’s unions this week began a nationwide strike, shutting down the country’s power grid and halting flights, while resorting to drastic measures to pressure the government to raise minimum wages amid a cost-of-living crisis.
Unions suspended their indefinite strike on Tuesday after government officials invited them to negotiations, as industrial action disrupted power supplies to the country’s 200 million people and left thousands stranded due to flight interruptions.
Negotiations have so far yielded no results. “They didn’t present anything [new] yet,” Festus Osifo, one of the unions’ leaders, told journalists on Thursday. Labor leaders have vowed to force another shutdown again from next week if the government does not agree a minimum wage.
So what are the sticking points in negotiations between the government and unions as a new strike deadline approaches?
What happened and what are the demands?
On Monday, two of Nigeria’s main trade unions – the Nigeria Labor Congress (NLC) and the Trades Union Congress (TUC) – jointly declared national industrial action. Labor officials, for the first time in Nigeria’s long history of strikes, went to the substations housing the country’s electrical grids, chased workers home and cut off power supplies across the country.
All airports, including two international ones, were closed. Workplaces and schools were closed and health services were disrupted. Crude oil production – Nigeria’s bread and butter – has also been halted, likely representing a loss of millions of dollars.
For months, unions – which represent public workers and employees of medium to large companies – have demanded an increase in the minimum wage to compensate for rising inflation.
Unions want the current monthly minimum wage of 30,000 naira ($20) to be increased to almost 500,000 naira ($336) – representing a 1,500 percent increase.
The government offered 60,000 naira ($40).
Although government negotiators considered the minimum wage increase “irrational”, union leaders justified the new amount. They say it is based on the current costs of an average family of six and that the total is affected by the current record inflation in Africa’s largest economy.
Reforms initiated by President Bola Ahmed Tinubu last year, including the devaluation of Nigeria’s currency, have caused inflation to soar, worsening the cost of living crisis in Africa’s most populous nation.
Monday’s strike followed the failure of months-long negotiations in mid-May.
Why is Nigeria experiencing a cost of living crisis?
It is the fourth time that Nigerian workers have gone on strike since May last year, when President Tinubu was first elected. Last August, resident doctors demanding better pay began a three-week strike that devastated the public health sector.
Although Nigeria is Africa’s largest economy and oil producer, decades of poor governance and corruption have drained the country’s coffers. Almost two-thirds of the population lives on less than 2 dollars a day.
Under Tinubu’s administration, however, the country experienced one of the worst cost-of-living crises ever, as food, transport and rent prices tripled last year.
A 50 kg (110 lb) bag of rice, a Nigerian staple, costs about 40,000 naira ($27) in 2023, but has reached about 100,000 naira ($67) this year. At 40 percent, the current food inflation rate is among the worst the country has seen in decades.
Desperate, some were forced to buy quality grains for animal feed, while others simply ate fewer meals. In one case, a mob attacked a commercial truck loaded with food, tearing up its contents in broad daylight.
Economists say the country’s problems are largely due to the weak performance of the naira against the US dollar. Because previous governments failed to increase local production, Nigeria is dependent on imports and is particularly vulnerable to external shocks.
Insecurity in the north of the country, where armed groups operate, has also harmed agriculture and contributed to rising costs. Furthermore, previous President Muhammadu Buhari’s central bank flooded the market with cash, worsening the naira’s problems.
Has President Tinubu made the situation worse?
In his campaign promises last year, Tinubu promised to stabilize the currency and revive the struggling economy. But new monetary policies implemented by the president on day one exacerbated the problems and led to the naira losing 60% of its value by February, analysts say.
The policies included an abrupt removal of costly, decades-old fuel subsidies that previous governments considered costly and unsustainable. Additionally, Tinubu devalued the naira twice, merging official and black market rates in an attempt to attract more foreign investment. But gains have been slow and the resulting inflation has stifled the economy.
“It is not correct to attribute all the blame to the Tinubu administration,” highlighted Oluseyi Awojulugbe, senior analyst at think tank SBM Intelligence, noting that the president inherited an economy in crisis. But Tinubu was to blame for failing to mitigate the expected consequences of the reforms.
“They advanced these policies without creating a social safety net to cushion the effect. The government could have given a salary bonus [or] has provided some subsidies to farmers facing high fertilizer costs,” she said.
Government reports in recent weeks have touted a brief recovery in the naira as a sign that the measures have paid off, noting that foreign investment has increased. But, Awojulugbe said, only short-term investments have increased, with investors still too insecure to commit to the long term.
“You cannot build our country on what economists call ‘hot money,’” she said. “What Nigeria needs is patient capital – long-term investments that allow more businesses to flourish and employ more people.”
What did the government say?
Authorities initially resisted the unions’ demands and said they would not go beyond the 60,000 naira ($39) proposal.
The unions’ demand would increase government wage spending by 9.5 billion naira ($6.1 billion), government negotiators said. Information Minister Mohammed Idris Malagi said he was capable of “destabilizing the economy”, although some analysts point out that Nigeria’s political class is excessively pampered and overpaid, with members of parliament earning around three times as much than members of parliament in the United States.
Following the shutdown on Monday, government negotiators quickly resumed talks with labor leaders and committed to a minimum wage “above” 60,000 naira. It’s unclear how far authorities are willing to go.
Meanwhile, Senate President Godswill Akpabio, speaking in parliament on Tuesday, rebuked the union leaders and said the strike amounted to “economic sabotage”.
Some members of parliament also tabled a motion for “extreme” actions, such as shutting down electricity supplies, to be criminalized. One parliamentarian said he was certain that “a lot of people died” in closed hospitals during the two days of strike.
The network itself has collapsed due to mismanagement at least three times this year.
What is the next?
Over the next three days, union leaders will meet daily with government negotiators who are racing to present a final blueprint for President Tinubu’s signal within a week’s time. Progress appears to be slow as actual numbers have not yet been discussed, union leaders said.
Barring a conclusion that is acceptable to the unions, workers will likely go on strike again from next week.
Update: One Week Ultimatum, They haven’t presented anything different yet. FG shows Operation ooO! Don’t be for dey wires cho! Cho! Cho! A week is already coming. #Us DEMAND A MINIMUM WAGE NOW! pic.twitter.com/TrPYjSq7Ka
– Nigeria Labor Congress Headquarters (@NLCHeadquarters) June 6, 2024
There is speculation in the local media that the unions are willing to reach a 100,000 naira ($64) deal.
Is this an ideal number for Nigerians living in difficult times? Analyst Awojulugbe said this is a complicated question. Private companies, which employ most of Nigeria’s working population of 60 million, may struggle to pay a higher wage, she said, and some state governments are still struggling to pay the current minimum.
Additionally, more cash flow could also work against a central bank frantically trying to absorb excess cash and fight inflation, she noted.
Instead, many analysts say, unions should force the government to take more steps to force inflation down holistically, rather than pushing for higher wages. For the government, it is a dead end as it appears determined to implement a policy that could put pressure on Tinubu’s reforms.
“Whatever salary is agreed upon will put more money in the hands of Nigerian workers and we all know what happens when you have too much money to chase too few goods,” Awojulugbe said.
“The resulting inflation will mean there will be another need to review the minimum wage again. And so the cycle continues,” she said.
This story originally appeared on Aljazeera.com read the full story
