Similoluwa Daramola & Nathalia Odidika-Esezobor
INTRODUCTION
Fuel subsidy removal has remained a familiar discourse in the Nigerian socio-political terrain due to several attempts by previous administrations to remove subsidy. Significantly, the ‘occupy Nigeria’ protest of 2012 was centred around the attempt by the then President Goodluck Jonathan’s administration to remove fuel subsidy, which in the long run did not live to see the light of the day. Similarly, in 2016, former President Muhammadu Buhari also made attempt to remove subsidy but was threatened by oppositions from Labour organizations. Hence, fuel subsidy removal in Nigeria remained an unending dialogue between relevant stakeholders who argue for and against its removal. However, May 29th, 2023, marked a watershed through the proclamation of President Bola Tinubu’s ‘fuel subsidy is gone’. Those words instantly had a ripple effect on the availability and sale of PMS in Nigeria which was later followed by a hike in the price of crude oil by the Nigerian National Petroleum Company Limited (NNPCL) across the six geopolitical zones.
While some have argued that a partial removal would have been the best option in the light of biting inflationary trends in the prices of food and services, some have argued that a full removal would enable the government to drop the garb of politicization while channeling the subsidy to other sectors capable of improving the social capital of Nigerians. The inevitable removal of subsidy was due to the dwindling revenue from the oil sector owing to crude oil theft and the rising debt-to-revenue ratio of Nigeria. After all, the average Nigerian who views subsidy as the only succor benefitted from the government only consumes 3% of the entire subsidized fuel.[1] In the light of the fuel subsidy removal, the average employee particularly, workers who earn the national minimum wage or below will be grossly affected through increase in cost of transportation and other services. While still awaiting the projected palliatives from the government to cushion the effects of the subsidy removal, employers of labour have a huge responsibility to ensure that the impact of fuel subsidy removal does not adversely affect employees’ welfare through innovative strategies since wages will majorly remain static.
This article raises vital strategies the government and employers can deploy to alleviate the effects emanating from the subsidy removal on the citizens in both the formal and informal economy.
a. Consultation during Redundancy
The impact of the increase in fuel may necessitate the review of employment terms and even in some cases reduction of workforce. Employers are advised to ensure that statutory provisions on redundancy are complied with. For instance, Section 20 of the Labour Act requires that the employer should consult with the trade union or representative of the employees on the reasons and extent of the redundancy. The Act also requires that employers ensure that all severance benefits are paid and that the principle of ‘last in first out’ is adopted. These laid out procedures should be complied with to avoid incidences of litigation.
b. Flexible Work Schemes
Since the outbreak of the corona virus pandemic, organizations have been forced to adjust to various modes of operations which were previously considered as abnormal. This implies that flexible working schemes should be adopted by employers to ensure productivity and cost minimization. Employers are therefore implored to embrace technological platforms in the delivery of their services to cushion the impact of rising cost of transportation on the disposable income of employees.
Similarly, the adoption of flexible working schemes is largely dependent on the nomenclature and business operations of the employer. In this vein, employers have a duty to review the working strategy of the organization particularly organizations that are outside the manufacturing and health care sector. These strategies can involve hybrid work models and provision of technological platforms that ensure connectivity among employees but to mention a few. Generally, employers, particularly those in the private sector are most likely not disposed to reviewing salaries upward due to existing issues such as casualization of labour. Since this will have to be the reality, employers should adopt these strategies for a win-win situation which will reduce cost of office operations flowing from physical work, conserve the income of employees which in the long run reduce carbon footprint for environmental sustainability.
c. Variation of Employment Terms
Organizations with unionized environment will often receive requests from employee’s trade unions for the variation of employment terms particularly in salary increment. This is already the case in the public sector where there are ongoing negotiations for the increment of the national minimum wage between the government and labour unions. While these may be possible in the public sector, this may rather be unfeasible in the private sector due to several economic indices. However, employers that can afford increased wages should do so to ensure productivity on the part of employees.
Similarly, most employment contracts often contain resumption and closing time which brings to bear the need for variation. The projections of the fuel subsidy removal reveal that Nigerians will find the transition rough. Employers therefore have a duty to ensure that work-life balance is adequately managed to protect the well-being of employees. Practically, resumption time should be varied to a more feasible time considering the long traffic hours spent by workers daily to work and the hurdles of boarding buses to and fro especially in metropolitan cities, like Lagos.
d. Implementation of policies that support SMEs
Government could implement policies that support small and medium-sized enterprises (SMEs) that are the backbone of the Nigerian economy. These policies could include tax incentives, access to credit, and other forms of support that could help SMEs to thrive and create jobs. The informal sector is a critical and major backbone of the Nigerian economy. The government, therefore, is obliged under the social contract theory to protect workers in this sector through social protection policies, to cushion the effect of the subsidy removal.
e.Developing renewable energy infrastructure
Prioritizing the development of renewable energy infrastructure in Nigeria could create a new industry, create jobs, and reduce the country’s dependence on imported fuel. This could also help to promote sustainable development in Nigeria. On the other hand, employers who customarily provide staff buses for employees can also opt for locally made Compressed Natural gas (CNG) buses to reduce the cost implications of fuel purchase on the revenue of the organization while also reducing carbon footprint.
f. Investing in high-employment sectors
Encouraging investment in sectors of the economy that have high employment potential, such as agriculture, manufacturing, and technology, could create new jobs and offset any job losses that result from the removal of fuel subsidies
CONCLUSION
The removal of fuel subsidy has come to stay and has therefore become imperative for the nation at large to adjust to the corollary effects of the removal. The government and employers of labour should therefore adopt innovative strategies to ensure that employees’ welfare is not sacrificed in a bid to implement government policies.
[1] Ignatius Igwe ‘Fuel Subsidy Benefitting the Rich, Killing Nigeria’s Economy’ Channels News (Lagos, 27 May, 2023)
https://www.channelstv.com/2023/05/27/fuel-subsidy-benefits-the-rich-killing-nigerias-economy-adesina/ accessed 24 June 2023