Minimum Wage

College Essay Carlos Urias 9/1/2011 Robert Leighton once stated, “Poverty keeps the vision pure. ” I fully understand and can relate to this quote as it pertains to my life. Exposure to economic difficulties at a young age helped shape the person I would grow up to be. Being economically troubled is an experience that has changed my character and has stimulated the decisions I have made throughout my life. Through the hardships of living an economical unstable childhood I have learned to embrace opportunities, the importance of perseverance, and become a charitable person.

The cause for being at an economic disadvantage can be traced back to when my parents immigrated to the United States. Because my parents were immigrants, they had no documentation and had to work vigorous hours for minimum wage. They moved into California, and this is where I was born. We lived in a poor neighborhood and there was only enough money for the things we needed and not for what we wanted. Rising rent prices and minimum salaries were among the contributing factors that led to my family struggling to stay economically stable.

My parents had to each get multiple jobs to try and make us enough money to proceed on living here. The lack of money resulted in problems at home, work, and the neighborhood. Alongside my family, although just a child, I also suffered the consequences of living in these conditions. Because we were living like this, I witnessed a lot of violence, hate, and many hard times. I understood that we were at a disadvantage and learned from my experiences as I witnessed how my family tried to cope with all the problems.

Although there was not any money to throw around, I learned many valuable lessons from my family, my environment, and the situations we were living in. As a result of having an economically unstable childhood, I have learned to embrace opportunities. When my family and I were living under the economic pressures of California, it was clear to me that we did not have opportunities of any kind open to us. It is because of this that we were living the way we were. As I grew older, I realized that there were so many opportunities for me and the options were limitless.

Because I remember the hard times in which I came from, I do not take this for granted and take advantage of every beneficial opportunity that is presented to me. My experiences taught me that not everyone has opportunities available to them and the ones that do should be thankful and not take it for granted. These hard economic times led me to see the importance of having perseverance. I admired the way my parents would work so hard day after day and their hopes and dreams would never be crushed.

I realized that you cannot give up on what you desire the most. As a child, I always told myself I would pull us out off the hard times; however, I had no idea how. I know now that the key is perseverance. I also understand now that having perseverance helps you keep pushing forward and makes you never question your goal, but instead keep striving for it. Without perseverance we never would have gotten through the economic troubles and the conflicts that came along with that.

Lastly, being economically unstable has shaped me into the charitable person I am today. As a kid I came to understand that many people did not have everything they wanted and that they too faced extremely hard times and struggled to live. Because I can relate, I have sympathy towards everyone who lives in those conditions, or even worse than that. My childhood showed me that there are some things you have no control over and sometimes living in poverty is one of them.

For this reason, I try to help as much as I can and extend my hand to those who need it the most. Living in an economically unstable childhood helped me to appreciate opportunities that may rise, realize the importance of perseverance, and become a helpful person towards the needy. Taking into consideration that not everyone has the opportunities that are available to me, I take advantage of them. Perseverance is needed to harness these opportunities and make the most out of them. Because I know where I have come from, I know where I am going.

Today, Nigerians who are lucky to have jobs are finding it increasingly difficult, if not impossible, to survive on their monthly payments. The major reason for this is that the pay of the Nigerian worker is not only one of the lowest in the world; it has also not improved as it should in the face of changes in market conditions. Workers in the public sector are particularly worse off. As huge revenues have continued to be acquired from the sweat of workers, the pay and conditions of workers have continued to deteriorate; workers have increasingly been excluded from the wealth created by their labor.

In Nigeria, the difference in pay between managers and workers is not only one of the highest in the world: out of every N1 paid as wages, managers collect more than 80 kobo while workers receive less than 20 kobo; the difference has been increasing over the years. At the same time, owners and managers of banks, top government officials, and members of the political class have seen their pay and wealth swell astronomically while workers have had to survive on starvation wages. Workers can no longer survive on what they earn; the situation is made worse by the fact that those who work also have to support family members who form part of the huge army of the unemployed. It has become crystal clear that there is an urgent need for an upward review of the national minimum wage and an upward general review of wages and salaries. History of wage reviews fought by workers This is not the first time that workers would be asking for a general upward review of wages and an increase in the National Minimum Wage. Between 1945 when workers staged the famous 45 days general strike for a Cost of Living Allowance (COLA) and 2007, when the demand won by workers for a 25% general wage through the Ernest Shonekan Wage Consolidation Committee was arbitrarily cut down to 15% by Obasanjo, workers have struggled at 15 times to have wages improved and a national minimum wage legislated upon. But the struggles produced notable victories for workers and the NLC, it was usually the case that: the National Minimum Wage was always set below the minimum wage needed by workers to survive.

Because of the inadequacy of the wage, some state governments elected on their own to pay more. Even then, there were also some 1 state governments that pay less than the stipulated national minimum wage. The result was that workers always could not cope. The wage reviews were largely unstructured; sometimes negotiated wages were changed by the government through circulars; at other times, the government affected unilateral wage increases. Agreements reached with the government were sometimes distorted at implementation or not implemented at all by the government. For example, the 2000 Wage Review Agreement provided for a further 25per cent wage increase for workers with effect from May 1, 2001, and 15 percent wage increase with effect from May 1, 2002. This was not implemented.

Following an industrial dispute over this a 121/2 percent increase rather than the 35 percent agreement in 2000, was signed in 2003. But in the end, only an increase of between 4 and 12 1/2 percent was implemented by the Federal Government. Although the Shonekan Committee was set up against this background and recommended a 25% increase in salaries, Obasanjo unilaterally implemented a 15% increase in 2007. The government also failed to abide by the timeframes set out for subsequent negotiations with workers. Workers always had to fight to get the government to agree to collective bargaining even when the procedure was agreed upon in previous negotiations. Today, workers find that they have to fight yet again to get the government to agree to negotiate a new National Minimum Wage and a general upward review of wages. The rationale for Upward Wage Review today There are several reasons why there must be an upward review of worker’s wages today.

The consequence of the abdication of the agreed approach to the implementation of the phased-wage increases has been that wages and salaries are today sharply depressed and incapable of meeting the basic needs of most workers. In the last year, inflation has intensified with the cost of living index in the urban sector increased by over 14 percent. The disproportionate increase (20. 9 percent) in the cost of food means that the erosion in the real wages and salaries of workers is alarmingly severe. The process of monetizing and consolidating in-kind benefits that were hitherto not taxed has resulted in an escalation of the tax paid by workers. This has further depressed the real take home pay of workers. 2 All over the world, salary increase in the public sector is underlined by the principle of equity and the need to bridge social inequality in the face of widening economic and social gaps amongst citizens of a country.

In Nigeria, while workers’ salaries increased by 15 percent between 2006 and 2007, those of political office holders increased by over 800 percent. The 2008 increase in the compensation of political office holders has further aggravated the disparity (Table 1). On average, their compensation package has been doubled. We need to reduce this disparity for greater equity, productivity, and morale. TABLE 1: Salaries of Political Office Holders (Pre and Post Consolidation) S/N Categories 1 Special Assistant to the President; Chief Speech Writer to the President; Chief Press Secretary to the President Members, House of Representatives; Deputy Chief of Staff TTP; Senior Special Assistant, TTP. Ministers of State; Senators; Principal Officers of the House of Representatives; Special advisers TTP.Deputy Speaker, House of Representatives; Minister; Secretary to the Government of the Federation, Head of Civil Service of the Federation, Chief of Staff TTP; National Security Adviser; Chief Economic Adviser; Inspector General of Police; Chairmen, Federal Civil Service Commission, Federal Character Commission, National Salaries, Incomes, & Wages Commission, Revenue Mobilization Allocation & Fiscal Commission.

Deputy President of the Senate; Justices of the Supreme Court; President, Court of Appeal. Speaker of the House of Representatives. HASS (Basic) 626,700 865,200 CONSS* 4,392,012 13,102,402 3 4 1,015,700 13,374,240 1,194,600 15,094,426 5 6 7 1,403,700 15,240,500 1,649,400 16,348,926 Vice-President of the Federal Republic of Nigeria ; 1,938,000 21,524,164 President of the Senate; Chief Justice of Nigeria . 8 President, Commander-in-Chief of the Armed 2,506,000 24,954,405 Forces of Nigeria . *Source: National Salaries, Incomes and Wages Commission and Revenue Mobilization Allocation and Fiscal Commission, Abuja 3 In Sub-Saharan Africa (SSA), Nigeria ought to be paying one of the highest minimum wages, given its resources and level of development.The reality, however, is that the existing minimum wage in Nigeria is one of the lowest in Africa. Table 2 presents the data for Sub-Saharan Africa.

The data in the table takes adequate account of the need to adjust the wages to differences in the cost of living or what is called the Purchasing Power Parity (PPP). Table 2: Minimum Annual Wage Levels in African Countries ($USD) Country Minimum Special Notes PPP PPP-Based Wage Factor Minimum Wage Angola 1511 1. 975 2984. 23 Botswana 3011 2. 106 6341. 17 DRC 468 2. 077 972.

04 Kenya 948 2. 534 2402. 3 Lesotho 1080 For Manufacturing 1. 847 1994. 76 Madagascar 336 3. 107 1043. 95 Malawi 407 3 1221.

00 Mozambique 1177 2. 129 2505. 83 Nigeria 550 2. 274 1250. 70 South Africa 2780 Farm Minimum 1. 651 4589. 78 Wage: $975 Swaziland 1369 1.

958 2680. 50 Tanzania 1680 2. 8 4704. 00 Zambia 1147 1. 81 2076. 07 Average 1266 2674. 33 The current national minimum wage of N7,500 is far below the minimum cost of providing basic needs for the worker and his / her immediate family.

Our survey shows that today the minimum cost of providing for basic needs is N58,200 (Table 2).This estimate is based on threshold hardship levels in which 6 or 8 people may be forced to live in one or two rooms and endure a dietary and living style that is most rudimentary. Additionally, it should be noted that N18,000 is allegedly spent on the feeding of one prison inmate monthly, while the estimate here is merely N20,000 for the feeding of a family of 6 per month. 4 An examination of the cost of living since the enactment of the National Minimum Wage Act 2000 shows clearly that the cost of living index has risen so much that the real value of the minimum wage set by the law has virtually been wiped out. Employing published data on the Consumer Price Index (CPI) from 2000 till July 2008, and taking into account developments in the overall economy and compensation adjustments since 2000, the minimum wage of workers in 2008 can be computed. This computation shows that in real terms, the minimum wage of workers would have to be adjusted upwards by a minimum factor of 4 in order to maintain the relative position of the least paid worker in the national compensation structure established in 2000. Thus, the appropriate amount required in 2008 to maintain the real value of the National Minimum Wage set in 2000 would be (N11,213.

52 x 4=N44,856). Table 2: Estimated Monthly Cost of Meeting Basic Needs for a Representative Family * Item Accommodation Utilities a. Electricity b. Water c. Kerosene d. Communication Food Clothing Medical Education Cleaners, Soap and Detergents Entertainment, Recreation Communication Miscellaneous Total Cost (N) 6,000 1,000 500 4,000 2,000 20,000 4,000 5,000 6,000 1,300 and 1,000 1,500 N58,500Our Demands Based on the foregoing Congress demands: (i) A new National Minimum Wage of N52,200. This is the approximate average of the minimum wages when we take into consideration Minimum Annual Wage Levels in African Countries, the minimum cost of providing basic needs for the worker and his / her immediate family, and the cost of living data.

5 (ii) that the Federal Government sets up a tripartite committee as a matter of urgency to negotiate and agree on this, so that the National Minimum Wage Act 2000 can be amended to reflect the new amount. It is instructive to note that current negotiations on fixing a minimum wage for Ghana have recently reached a preliminary agreement within the tripartite framework to adopt the basic needs approach in computing the minimum wage. (iii) an amendment to the Act to the effect that the National Minimum Wage law should apply to any establishment employing 20 or more workers, instead of the 50 workers currently stipulated by law. (iv) a general wage review; there is an urgent need to commence negotiations in both the public and private sectors so as to agree on new compensation packages. v) a wage review in the public sector based on the minimum wage computed above. Currently, the least salary in the Civil Service under the Consolidated Civil Service Salary Structure is N133,564 per annum or N11,130 per month. The new salary structure recommended by the Congress is based on the least salary of N52,200 per month or N626,400 per annum, which is the proposed new national minimum wage.

The new Consolidated Salary Structure would then be constructed so as to maintain the existing relativities in the salary structure. Sustainability and Affordability of NLC’s Demands Is the minimum wage proposed by the NLC reasonable, sustainable, and affordable? Can the nation pay the new national minimum wage? The answer to both and related questions is an overwhelming YES! It is a resounding YES for the following reasons: (i) An increase in the purchasing power and effective demand of workers will increase the demand for goods and services and translate into growth for the economy. The morale, and therefore, the productivity of workers will be greatly enhanced by the wage review. ii) Nigeria earns enough revenues, even with the downward slide in oil prices, to be able to pay. The problem in Nigeria is massive corruption by members of the political and administrative elite and not a lack of resources. To be sure, paying the new minimum wage will require that members of the political class cut their level of stealing of public funds. This will not be a bad thing; in fact, it will be good for the economy.

(iii) If the economy can accommodate the huge sums spent on political office holders, it can accommodate a general upward review of wages and a national minimum wage as proposed. In any case, more resources should be devoted to productive workers in any economy. Apart from political office holders, the profits declared in most areas of the private sector, continue to be massive. Even sectors that are contracting their operations continue to declare huge profits. Therefore, the public and private sectors of the economy are capable of paying higher wages. 6 Framework Proposed for the Negotiations The national minimum wage negotiations should be carried out within the tripartite framework, with workers, NECA, and government represented. The emerging agreement from this negotiation should then be forwarded to the National Assembly as a Draft Amendment to the National Minimum Wage Act, 2000.

At the conclusion of the minimum wage negotiation, the public service wage review negotiation should commence between labor and representatives of government, both Federal and state. Private sector negotiations should subsequently take place within the existing sectoral framework of collective bargaining. On the general wage review, we wish to call on the government to adopt the framework of collective bargaining, with representatives of all public sector employers, whether federal or State Governments, as employers, not as governments. Conclusion Congress makes these demands with great patriotism, sensitivity, and responsibility. Congress holds that collective bargaining and negotiations with trade unions are sacrosanct and in consonance with the spirit of democracy. Congress calls on the government to set up the necessary structures for the negotiations without further delay. To delay negotiations will further compound the living conditions of workers of Nigeria in the face of the alarming mass poverty already destroying their lives.

February 2009 7

 Minimum wage Is the price floor imposed by the government for the welfare of labor. Price floor Is the legal minimum on the price at which a good can be sold. It Is an attempt by the government to maintain prices at other than equilibrium levels. When a government Imposes a price floor, there will be two cases. One the price floor Is not binding if the price floor is maintained below equilibrium price level. In this case, the market forces naturally move the economy to the equilibrium level and the price floor as no effect.

In other case when price floor is above equilibrium level, such price floor is binding. In this case the market price equals price floor as government imposes such control on prices for the welfare of labors. At this point the quantity supplied exceeds the quantity demanded which results in surplus of labor I. E. Unemployment. Since the supply is high some seller are unable to sell all they want at the market price. The sellers who appeals to personal biases of the buyer, perhaps due to racial or family ties, are better able to sell their goods than those who do not.

By contrast, In a free market, the price serves as the rotational mechanism, and sellers can sell all they want at the equilibrium price. The Impact of minimum wage rate depends on the skill and experience of workers. Highly experienced and skilled workers are not affected because their equilibrium wages are above the minimum wages. Thus, the minimum wage raises the income of workers who have jobs but lowers the income of workers who cannot find Jobs. A labor market with a binding minimum wage: Minimum wage in context of Nepal: Minimum wages dictate the lowest price for labor that any employer may pay.

Wages of workers are considered a principal cause of Industrial disputes in Nepal. The prevalence of a low wage rate has aggravated the extent of economic exploitation of employees. An assessment has reflected that employers themselves are retelling a greater part of profits and benefits and only a small part to others sectors Including social securities and labor welfare activities. Wages and benefits are not compatible with increasing productivity and overall economic development of the country. So, to ensure workers a minimally adequate standard of living, the Minimum Wage

Determination Committee has set the minimum wage rate for formal sector accordingly. Naples labor market is subjected to the forces of supply and demand. Workers determine the supply of labor, and firms determine the demand. If the government does not intervene, the wages normally adjust to balance labor supply and labor demand. If government fixes the minimum wage rate above the market equilibrium level, the quantity of labor supplied exceeds the quantity demanded. The result Is unemployment. In Nepal the minimum wage was RSI. 200 In 2011 which Is not relevant due to the fast changing socio-economic realties. This Is the reason trade unions negotiating on behalf of employees are demanding that Mullen wages should be doubled to RSI. 12400. They have an argument that prices of particularly in Katmandu, an expensive city, even a monthly wage of RSI. 12400 for is far from enough for comfortable life. Some others have been asking for RSI. 15000 minimum salary claiming that it is insufficient to survive in towns and its suburbs with the present salary and wage structure.

So, let’s see the consumer price index (ICP) of Nepal to find whether the wage rate is determined on the basis of ICP. Annual National Consumer Price Index Base: 2005/2006=100 Highest minimum wage in South Asia: The minimum wage in Nepal as agreed by the employers and trade unionists in May 2013 is the highest in South Asia. Though Napalm’s minimum wage was highest in Pradesh in India raised theirs above Napalm’s. The average minimum monthly salary of India at US $47 still was lower than that of Nepal. Entrepreneurs believe that the problem of scarcity of workers in Nepal will decrease after the salary hike.

According to Upstairs Murray, Vice President of the Federation of Naples Chambers of Commerce and Industry (FINCH), the flight of workforce will be stopped as the daily wage has been increased along with the minimum monthly salary. Entrepreneurs have also claimed that the Indian workers can be attracted as the minimum daily wage has been increased from RSI. 230 to RSI. 318. Minimum Monthly Salary in Year Country In US $ Nepal Sir Lankan Bangladesh Pakistan 70 Attar Pradesh (India) Briar (India) Conclusion: The government has declared the minimum wage but it is difficult to implement because of anti-worker and anti-union mentality . N the part of the government, here is no system of implementation and mechanism for monitoring the progress. From the very beginning, disputes have emerged with respect to the implementation of the wages particularly in the formal sector. Wage issues have now become the most important agenda in the industrial relations in the country. If the government and employers do not take this matter seriously and if they fail to implement corrective measures, the workers will go frustrated resulting in industrial unrests and other adverse effects in productivity.

Over time and again minimum wage has increased. For long, the minimum wages earned by workers fell far below the amount needed to satisfy the family subsistence. But after unionization of labor, positive developments occurred in terms of real wages. However, only the fixation of wages cannot maintain healthy industrial relations. Regular monitoring of the implementation of the wages is very important. In the case of Nepal, this aspect is fully absent. Workers in enterprises or sectors where union is absent or weak are still compelled to work for a wage that is insufficient to earn a living.

It is recommended that the minimum wage is fixed for workers taking into consideration the existing inflation rate. Employers have been asking for a scientific method for salary and wage hike based on annual inflation rate published by the central bank that will end to fear every two years that employees might go on strike. The government’s move to automatically revise minimum salary and wage every two years from the beginning of the new fiscal year will give political parties little room for bickering in the industrial sector and disturb the business environment.