Text of an address by Minister of Power, Works and Housing, Babatunde Fashola (SAN), at the third triennial national delegates conference of Senior Staff Association of Electricity and Allied Companies in Abuja.
Democratic governance has taken root in Nigeria and has had its longest uninterrupted and acceptable run of 17 years.
Therefore, no question of legitimacy can arise and following that I argue that the methods of yesterday cannot be used to tackle today’s challenges.
Organized labour must change its DNA from its pre-colonial agitation days to a democratic postcolonial era. I hope you will elect leaders who appreciate this necessity, because it is critical in order to achieve the objectives for which unions were formed.
While it is impracticable in this kind of information to thoroughly discuss the history of the labour unions, it is important to state generally that they evolved in the 18th century in Britain and gained ascendancy rapidly during the Industrial Revolution in order to protect the weakness and welfare of workers.
Therefore, I can summarize labour unions as institutions that have evolved as interface between employers and their employees. With this background, I can now proceed to discuss my subject.
I will start by telling you a story.
Sometime in 2014, I sat next to a prominent Nigerian labour leader on a flight from Abuja to Lagos and we were discussing some labour crisis that was then engulfing the nation.
I will summarize some of the conclusions.
He said to me that he was surprised to learn that Government was considering paying workers who had gone on strike for the period they did not come to work.
He doubted whether Government was being well advised.
This, coming from a highly respected former labour leader, respected by those he led and those he confronted, was music to my ears.
When I prodded him further he not only said that this was part and parcel of the roles of the International Labour Organization, but that indeed every worker knew that if you went on strike, you did not expect to get paid.
He said that going on strike was a tough decision that was never taken lightly during his days and that it was always understood as a struggle that came with a price. The loss of income for the period of the strike is the hope that better conditions, whatever they were in dispute at the time, will be achieved.
He said that in his days, when a strike was planned, they ensured that the company doctor/clinic, the company security and the company accountant did not join the strike.
When I asked him why, he explained as follows:
Sometimes their strikes were met with force resulting in injuries to workers and they would take them to the company clinic to be treated by the doctor.
That they were not fighting their employers or their business, which was their source of livelihood. They were dissatisfied with conditions of service and expected to return to the business and work.
So they ensured that the accountant remained to keep books and assets of the company while the security secured the business and premises against looting.
All of this in Nigeria, and I pressed for more. He said to me that at one time long after he had stepped down as leader, the members had come to him to report their “victory” in getting the Government to sign a 40% wage increase.
He asked them whether the Government revenue had increased by 40% and where they expected Government to get the money to pay.
In his view, wage increases that exceeded 5-10 % were unrealistic and unsustainable at any one time, and were recipes for future conflict.
Ladies and gentlemen, this story represents the background for discussing the “Pursuit of Industrial peace and foster(ing) cooperation between employer and employee,” especially in Government institutions.
If taken along with the need for a change of DNA by labour which I have urged, this story sets the stage for examining the reality of agitations and expectations during negotiations for improved welfare especially as they relate to salaries and allowances.
Let me be very clear, as I have said repeatedly, any employer who toys with the welfare of his employees will soon lose not only the employees but also his business, whether in the public or private sector.
If a former labour leader felt that a 40% wage increase was unsustainable, let us look at what we did that has brought us to a situation where many states cannot now afford to pay salaries.
I know this is a very sensitive and emotive subject but nevertheless it must be discussed if we are going to find a solution to a situation where a worker goes to work and cannot put food on the table of his family and dependents.
But this is a time for deep reflection, re-consideration and refinement, so that we do not compound our mistakes.
Let us ask ourselves if it is right and fair to ask all states, whose incomes are different, whose cost of living is different, whose rent and food prices are different, to pay the same minimum wage.
Did we consider the real income of the states at the time, or did we base the decision on the bonanza income (income from high prices of crude oil which have now disappeared) when we took the decision?
When we took the decision to increase minimum wage from N7, 500 to N18,000 did we think through the facts which later emerged that:
a) Once the person on N7500 moved to N18,000, everybody who was earning N9000, N10,000, N11,000 and so on up to N18,000 had to get a corresponding raise in order to maintain hierarchy and seniority within the establishment.
b) Did we realize that those already at N18,000 had to move, to N20,000 and those on N20,000 had to move to N21,000 until we get to the top of the establishment, because this is what actually happened.
c) While N18,000 was not a lot of money, given the cost of living, the movement from N7500 to N18,000 was a 140% increase; and I know for a fact that one state asked for N42,000 from N7,500
d) Did the revenue of the state governments increase by 140%?
Have we not negotiated ourselves into conflicts and industrial disputes, as my co-passenger on that flight predicted to his colleagues about unsustainable wage increases?
Now that the oil prices have crashed by no less then 60% how do states pay salaries to keep industrial peace?
I have heard some people say that governors who cannot pay salaries should resign. That is at best emotive or at worst provocative.
The resignation of Governors will not produce money they do not have.
The way to industrial peace is honest, mature, frank and realistic negotiations, led by leaders who command the respect of their union members and can tell them the truth.
How do we determine the Truth?
One way is to listen to experience. My co-passenger had said from his experience, that wages in excess of 10% [at a go] were unreasonable and unsustainable.
The other way I will recommend is to learn from others.
I ask this because I think we may have applied the concept of minimum wage erroneously.
In essentially all jurisdictions, it applies to hourly paid (or Blue Collar) workers, and what you earn is a function of the number of hours you do.
In this way, when it is done, it rarely disturbs the establishment order, which then necessitates that once you move the minimum wage, you are compelled to move everybody who is above the minimum wage rank.
This is why you will see that in the United Kingdom which is not a federation like Nigeria, minimum wage has been approved to increase from 6. 70 GBP to 7.20 GBPper hour, over a 5 year period.
In the United States ,which is a Federation like ours , states can increase and determine their own minimum wage, while the Federal Government also appears to have powers to do so.
Only recently on Tuesday the 5th of April 2016, the states of California and New York passed new minimum wage laws to increase minimum wage from $10 – $15 an hour.
What is instructive is that while it is a 50% wage increase, the initial increase is only 50 Cents (half a Dollar) per hour, and it will graduate from there to $15 per hour between now (2016) and 2022 (over 7 years) ; in California.
In New York the increase is to graduate to $15 between 2016 and 2018 (Three years).
Therefore we can all see that in states and countries richer than us, more industrialized, the increase is graduated slowly, unlike in our Developing economy that used a Bonanza of oil windfall to doa 140% increase at once.
I hope that you will elect those kind of leaders who understand and accept economic realities as the Truth because we all need them.
The question to ask is which household or family does not adjust its lifestyle and behaviour when some of the income diminishes? Do they change their fathers or husbands or mothers and wives, whoever brings the money that supports the family?
From the general, I will now move to the specific which is the electricity sector and how to achieve” industrial peace and foster cooperation between employees and employers towards growth and development.”
Using the story of my co-passenger, I will examine some recent developments in the electricity sector and see whether there are lessons for us there.
Apart from reasonableness of wage increases, he spoke about protecting the business while thrashing out the dispute.
Very recently, there was a dispute between Ikeja Distribution Company and its employees. The heart of the matter was a termination of the employment of some 200 workers.
I know that the DisCo is now largely privately owned even though Government retains a minority shareholding.
The reaction of the union was not to refer the case to the industrial court but to essentially paralyze the operations of the distribution company.
Coincidentally, there was also a widespread power outage that affected areas beyond the distribution areawhich is now being investigated.
However, the resultant blackouts and power outages were suffered by the employees who were being fought for, and those who had employment, and many millions of ordinary poor Nigerians who were struggling to get on with their lives.
Was the strategy deployed to protect the rights of 200 people, all of whose rights I acknowledge are important, worthy and justifiable if it inconvenienced millions, and caused losses to the company?
How is a company that is making losses, from the actions of those employed to make profit for it, then able to financially secure the welfare of the same people?
In a near parallel situation, the electricity sector, which is dependent on the petroleum sector for oil and gas to power about 20 gas turbines that supplies our nation, suffered another blow because workers in the oil and gas sector chose to protest the announcements of a reform policy in NNPC, by stopping the production of the gas they were employed to produce.
The result of this action was that 13gas power plants with a cumulative power production of 1088 Megawatts were shut down.
Is this the recipe for industrial harmony in the sector? How does the sector recover the loss of an estimate of N2 Billion during the period?
A snap survey of strikes in the electricity sector and its affiliations which I conducted while preparing this speech showed the following results:
Summary:
Date of Incident
Affected locations
Description of Incident
Name of Union
Estimated loss in revenue
April 28 – 5 May 2014
All Benin DisCo Locations in Edo State, Ondo State, Delta State and Ekiti State
The effect of the disruption was a huge loss of revenue as it happened in the last week of the month of April which is cash collection week. At that time customers paid at the Business Units and since the offices were sealed by NUEE BEDC collection was the lowest recorded since take over.
In a location in Edo – Euvoriaria, the union beat up staff they met in the office and destroyed office equipment
In Owo, the Union refused to open the locked gates for business.
The Management and Union meeting took place on the 7th May to resolve it.
BEDC Staff Union
N576 million
June 11 2014
Port Harcourt DisCo
The Nigeria Labor Congress, NLC, Cross River Council sealed the premises of Port Harcourt Electricity Distribution Company, PHEDC, in Calabar over the sack of 134 Workers inherited from the Power Holding Company of Nigeria.
NLC Cross River
N66 million
Feb 8 – 10 2015
Benin DisCo
For 2 days workers were prevented from entering BEDC locations, in Akure and Igbara-Oke particularly
NLC
N144 million
May 7 – 9 2015
Kaduna DisCo
Labour disagreement
NUEE & SSAEAC
N65 million
May 22 2015
NNPC strike- all NNPC/ NGC pipelines
Egbin, Olorunshogo I & 11, Omotosho 1& 11, Geregu I & 11, Ihovbor And Sapele (NIPP) On The Western Axis And Alaoji On The Eastern End.
The recent NNPC strike crippling the power sector is not the only such incident in recent history. In late May 2015, strike action by the Nigerian National Petroleum Corporation (NNPC) chapter of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) led to a similarly precipitous fall in electric energy in the country: media reports showed a drop from a peak of 4800MW to about 1327MW on May 26 2015. The workers were protesting the transfer of the operatorship of the Oil Mining Lease (OML) 42 to two indigenous companies, claiming the move would affect the fortunes of NPDC and its staff.
Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN)
N2 billion
Nov/Dec 2015
Kaduna Disco
Labour disagreements
Ex PHCN casual staff
Insufficient data
Feb 05 2016
Ikeja Electric
Tariff Hike Protest
NLC
N97 million
Feb 08 -09 2016
Nationwide
Tariff Hike Protest
NLC
N800 million
March 7 2016
Disconnection of the Lagos Metropolis
On Monday March 7 2016, it is suspected that striking union workers at Ikeja DisCo disconnected the Egbin – Oke-Aro 330kV line at 10:03hrs.
This led to faults on all 330kV line feeding Lagos through sympathetic tripping. The entire city of Lagos was therefore cut off the grid by this action. As a result, Egbin Power Plant (1100MW) tripped on high frequency.
Egbin was restored on Tuesday morning – 8th March 2016 only to go out of service again due to the NGC shut down.
Ikeja DisCo staff union
N426 million
March 8-9 2016
Shut down of NGC pipelines affecting Egbin, Sapele I, Geregu I, Omotosho I, Omotosho NIPP, Olorunsogo I, Olorunsogo NIPP, Alaoji NIPP, Sapele NIPP, Ihovbor NIPP.
Rivers IPP was affected transmission faults not gas constraints
As a consequence of the NNPC strike, all plants primarily supplied gas by NGC were unable to generate gas on March 8th and 9th 2016. Generating plants reported increased constraints as early as March 8th 2016. As at 1500 hrs on March 09 2016, only the following plants were generating power: Omoku I, Trans Amadi, Afam SPDC, Okpai, Ughelli, Odukpani, Geregu NIPP and the Hydros (Kainji, Jebba, Shiroro)
Estimated loss due to gas withheld was an average of 1088MWH/H (on the conservative side) on March 8th
The NCC reported total gas constraints of 3300MW on March 9thand 334MW in line constraints. Estimated gas unsold or lost was about 304mmsfcd.
Due to the sudden drop in generation, the System Operator had difficulty maintaining grid stability, and was forced to request that DisCos shed load to avoid a collapse.
Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN)
N3.2billion
March 8 2016 – On-going
Azura IPP 450 MW construction site
National Union of Civil Engineering, Construction, Furniture and Wood Workers (NUCECFWW).are demanding a 102% pay rise which is completely impossible for construction employers to match. The Industry is currently in terrible shape as 50% of the workforce has been laid off in the last 12 months and the NUCECFWW strike only serves to worsen the situation. More jobs will be lost and more businesses will collapse.
This would set the Azura project back by a good three weeks. This is hugely damaging, not just to the site itself, but also to investor confidence.
National Union of Civil Engineering, Construction, Furniture and Wood Workers (NUCECFWW).
N360,000million
(based on 6 days)
March 8 to 13 2016
$300,000 a day @ N200 = N60million
Estimated Total
7.734 billion
Can an employee who caused the employer such financial losses in all good conscience expect improved welfare packages or industrial peace?
Or have the employees taken over from the employer?
Ladies and gentlemen, at the time when CHANGE seems to be on everybody’s lips, let me say it is not a mantra.
It is as I said an occasion to reflect on what we have and where we are, to ask ourselves whether we should review our situation, and to decide whether we should refine it. That is what I understand by CHANGE.
If we truly think and believe that we want change, only us and no one else can effect the change.
I started by talking about the origins of unions in Britain. I will conclude by telling you about some of the changes that are being contemplated there.
In the build up to the last General Election, the Conservative party saw that the nation was losing productivity as a result of repeated strikes.
They found out that most of the strikes were being championed by union leaders rather than the majority of the union members themselves voting for a strike.
They also found out that the union leaders were doing so in order to stay popular with workers who did not necessarily want to go on strike.
As a part of its Economic policy for growth and development, it promised the people of Britain to amend the labour law to ensure that at least 50% of the members of a union, rather than just a few of them MUST vote at a meeting called to consider a strike before a strike can legally be called.
I will leave this as food for thought for you labour leaders who truly desire industrial peace and cooperation in the Electricity sector.
I know that you, more than anybody else, know how much of your disposable income you spend on petrol, diesel, batteries and inverters to generate your own electricity.
I know that you know how much savings and relief this would be if you do not have to buy diesel or petrol or private generators to provide electricity for yourselves.
But let me also ask all of you to remember that the only reason why you and I are employed in the public sector is to provide power for everybody, not to disrupt power supply.
I am sure that one year of uninterrupted production, dedicated service and creative dispute resolution can have a significant impact on power supply, if you see yourselves more as part of the Government rather than more as union members.
I invite you to claim your membership of Government with even greater pride than you claim your membership of unions.
After all, it is the Government and not the unions that pays the salaries that put bread on the table. More importantly, it is your membership of Government that gives you the privilege to serve.
