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‘Manufacturing sector is operating at less than 55 % capacity utilisation’

Nigeria’s industrial relations space seems always to be at war, as protests and strikes are frequent occurrences with the struggling economy often bearing the brunt due to disagreement between and among the organised labour, employers, and government.

In this interview with BusinessDay’s Joshua Bassey, Adewale-Smatt Oyerinde, the director-general of NECA, proffers solutions and also speaks on other national issues.

What’s your take on the recent suspension of a planned labour strike?

We commend the suspension of the strike because we have consistently advocated that the strike does serve any significant purpose from the perspective of the private sector, rather it will dig us deeper into the hole considering the state of the economy and the precarious situation of the Organised Private Sector (OPS).

We have always advocated for social dialogue and we are glad that social dialogue thrived in their conversations. We, however, hope that all the parties (labour and government) will live up to their obligations and commitments in the Memorandum of Understanding (MoU) that was signed.

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There’s so much disagreement and fight within the industrial relations space. What would you advocate to achieve enduring harmony?

Not honouring agreements and constant threats of strike as we see today are all symptoms of a dysfunctional industrial relations system in Nigeria. The industrial relations system creates a path and gives a standard rule of engagement that before you come to the negotiation table, you must have received a mandate and that is the basic principle of negotiation.

We need an industrial relations policy. It is already on the ground in the Ministry of Labour. We got to the stage of validation last year; we need to do a revalidation, where all social partners will sign onto it.

There is a paucity of knowledge; even among social partners of our roles and our responsibilities and we must be deliberate at all levels. Labour must continue to train and retrain its leadership.

Employers must continue to train and retrain their leadership. The Federal Ministry of Labour and Employment must be twice active in the context of training and retraining officers in the ministry, because if the ministry is the one to adjudicate, then their knowledge base should be more than those that they are to manage.

We must deliberately leverage the support and capacity that ILO has given us in that space and continue to emphasise training for social partners. It is not negotiable. We should ensure that we all play our part in building our capacity as stakeholders.

From President Tinubu’s Independence Day broadcast, you said the OPS was sidelined. How specifically did the government do this?

So, in the context of our priorities, there are things we want the government to address. Probably the temporary removal of 7.5 percent VAT on diesel, while it is appreciated, it might not be on the top priority list of what we want the government to address.

The temporary removal of VAT on diesel is one of the steps to support the OPS. It is a welcome development, but whatever palliative you give, if you do not address enterprise sustainability, it would be neutralised by the high cost of doing business and the high cost of goods and services.

That is why we say that the government must address the two issues concurrently. As you are addressing the income side, you are also addressing the production side so that they do not neutralise each other.

We are happy that those issues were brought on board but we believe much more could be done, because if we list our utmost priorities, maybe the issue of temporary removal of VAT on diesel may not be there.

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So, what specifically are OPS’ topmost priority areas?

We have challenges of double taxation which have been addressed. I recall President Tinubu’s broadcast earlier in August, where he mentioned that N75 billion would be earmarked for manufacturing enterprises and N125 billion for micro, small and medium-sized enterprises (MSMEs) and the informal sector. Our priorities would be definitive timelines on when these funds be released.

A top priority for us is how would he address the issues surrounding forex. Currently, forex has become a big challenge in buying input and it is progressively making a mess of projections.

You can’t fly when the issue of forex continues to escalate. We will situate the temporary removal of VAT on diesel within the context of what the government should do as a way of ameliorating the challenges faced by Nigerians. If you remove 7.5 percent VAT, it reduces the cost of diesel, makes transportation easier for all Nigerians and the running of diesel-powered generators for employers easy.

So, it is not an employer-focused intervention. It is an intervention for Nigerians which we think the government has done to address issues that concern workers, employers and Nigerians generally.

As it is, organised labour both in the public and private sectors is less than five percent of the population. So, the intervention should focus on everybody within the context of what they can get immediately, and that is how we think diesel removal is a palliative for all of us as Nigerians. Regarding the N75 billion issue that was brought up as an MoU for small businesses, we believe strongly that the president has made a pronouncement in August, and we strongly believe that it will be implemented. Nevertheless, we want definitive timelines.

FG agreed to a N35,000 salary award to federal workers, what’s the private sector looking at for their employees?

We have a definitive financial award going on across the board in the private sector. We support in cash and kind through allowances and have adjusted salaries even from the unusual sectors. Recall that some of the banks went as far as a 100 percent increase in salaries. So, the private sector is responsive and it is across the board.

The other non-financial part of it is that we have come up with measures such as working from home to reduce the pressure on transportation costs. Some are doing as much as two to three days working from home to reduce the pressure on transportation and the cost of living.

Some have also gone into the issue of product-sharing. It is going on everywhere. Members have also done the issue of transport organisation, where you meet and outsource bus promoters. The bus brings everybody coming in from a particular area to the office and returns.

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That is what the private sector has been doing. We started this in June and the president alluded to it in his August broadcast, where he appreciated the private sector for taking the lead.

So, we are taking the lead in the promotion of employees’ welfare. On the issue of the national minimum wage. We are also far ahead of this conversation. We negotiate every three years through a collective bargaining agreement.

Check most private organisations, their minimum wage is far above N30,000. Each sector has a minimum wage that is negotiated at the sectoral level, which is far above the national minimum wage.

The national minimum wage is a guide and because of our commitment to those out of that network, we all agree that there must be a national minimum wage as it is done globally.

The private sector is in a precarious situation currently. Notwithstanding the multidimensional and existential challenge that the organised private sector faces in this environment, we are still doing far more than any other person in this environment.

What should be done to address the forex crisis?

I think the main challenge we have is the supply challenge. Our sources of forex are challenged. One is revenue from crude oil, which is being challenged by oil theft.

You can’t produce the quota that OPEC has given you. So, that is limiting your capacity and ability to earn.

The second is our propensity for imports, including fuel, which is also putting pressure on the forex. Also, our continuous challenge is the local production of goods and services. So, our long-term solution is to ramp up local production.

For the manufacturing sector that is currently operating at less than 55 percent capacity utilisation – we need to ramp up local production to about 60, 70 or 80 percent. And then reduce our propensity for import and the pressure on forex will progressively reduce too. Apart from fuel importation, two other areas that are putting serious pressure on forex are education and medical tourism. In the context of national development, the real sector needs forex, medical tourism needs forex and education needs forex too. The question is what is my priority? I pick my priority, and then I channel the forex I’m getting to that sector while I ramp up the issue of the war against oil sales to improve my supply side. If we don’t deal with the issues of the supply of forex, then it becomes difficult for us.

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Also creating an environment that is conducive for investors is a big issue because as an investor, for me to bring my capital to this environment, I will assess if the regulatory environment is conducive to doing business. Is the judiciary independent? Because if there is a crisis between my business and another business, who is going to adjudicate? So, if I don’t have confidence in the judiciary, then I realise I might run into problems. The third part is the legislature. Is the legislative environment conducive to business? So, ramping up the supply side and focusing on local production is the heart of where we should go. If you ramp up local production, you are ramping up employment generation. As you are ramping up employment generation, you are also ramping up income because the employees will pay tax, and businesses that are expanding and improving will pay corporate tax. So, it becomes a win-win for everybody.

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