Slashing salaries won’t end recession – NLC | Nigeria News Today. Your online Nigerian Newspaper

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The Nigeria Labour Congress on Wednesday called on the Federal Government to put in place coherent economic blueprint to tackle recession in the 2017 budget.


The NLC Chief Economist, Dr Peter Ozo-Eson, said that the preparation of the 2017 budget should not be delayed like that of 2016.

Ozo-Eson also advised governors not to slash salaries of their workers, explaining  that salaries of both the public and private sectors constitute the bulk of what is driving aggregate demand.

“In the 2017 budget, I think government has a lot of work to do.

“So that we do not end up a again like the 2016 budget that took such a long time with a lot of difficulties, problem here and there.

“For the medium term strategic paper that they had put forward already, I think it should be more critically evaluated so that it can provide a coherent base for the 2017 budget.

“Part of the problem we see however is in articulating the budget, we need to have an economic blueprint that we can to use to tackle the recession

“We have not seen this; therefore, the budget is an instrument that should be used to actualise such a blueprint.

“I think it is important for government to put its act together to quickly put an economic blueprint to address the recession.”

Ozo-Eson, who is also NLC General Secretary, said that for government to have a coherent blueprint, it must engage all segments of the society, both private sector, small scale producers, labour, among others.

He said that if the blue print was packaged from all sides, it would address the recession in the country.

He said, “Once you have that in place the budget then becomes an instrument of implementing such a blueprint.

“I think that not putting blueprint in place and talking of budget, it will be a mismatch and the policy will not be coherent.

“Part of the problem we are also facing is the downgrading of planning, if we are planning the way we used to.

“Then it would have been easier to seal the blueprint and therefore use it to address the present situation.”

Ozo-Eson said that due to the economic downturn in the country, many state governors were owing salaries while some were still looking for ways to slash salaries.

He said that cutting of salaries cannot be the way out of the recession, to a large extend, salaries of both the public and private sectors constitute the bulk of what is driving aggregate demand.

“So we need to stimulate aggregate demand in order to get out of the present recession.

“If you pay like the current minimum wage, which is clearly not a living wage, then people are not going to demand goods and services.

“If they are not able to demand for goods and services, then the few manufactures that we still have are going to find that their goods are not being bought.

“Therefore inventories will built up, they will then reduce production that will further complicate and deepen the recession that we are in,’’ he said.

Ozo-Eson called on government to have general equilibrium approach in coming out with the 2017 budget.

He said that there was need for government spend out of the recession to stimulate aggregate demand, which would also be capable of stimulating domestic production.

He called on the government not to borrow huge loan for the development of infrastructure as it might not be able to generate its own revenue.

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