Fuel Price Hike And Trade Union Negotiations By Izielen Agbon

It was incorect for the NLC and TUC leaders to agree that the fuel price hike and the deregulation of the PMS market are inevitable. The union leaders should not have agreed that market forces should determine the PMS price without the intervention of the mobilised masses of Nigerian people while the Federal Government itself was interfering in the petroleum products market and deciding the PMS price. It is obvious that they did not understand how the petroleum products market works, the neoliberal roots of the import parity pricing model and its implication for their unions and members in the long run. 

There are two markets that are of interest here. These are the labour market and the petroleum products market. The IMF, Federal Government of Nigeria, the NLC/TLC leaders now argue that market forces dictate prices in the petroleum products market. This is not true. A government Price Review Committee decides the price of PMS in Nigeria. It is a bureaucratic decision or a direct government intervention in the market. The petroleum products market is not a classical free trade market which assumes a large numbers of buyers and  sellers. We know that there are few sellers and many buyers in the PMS market. The market is therefore an oligopolistic sellers market. Left on its own, without any governemnt intervention, prices will tend to be oligopolistic. 

Road transportation is the main mode of transport in Nigeria and PMS is basic to the movement of goods and persons in the nation. It is not a commodity that many buyers can do without. Hence, demand is inelastic. Large increases in prices lead to small changes in demand. Furthermore, a fuel price hike increases the prices of other commodities. The reverse is not true because prices are sticky downwards. A decrease in PMS prices does not lead to a decrease in the prices of other commodities. A fuel price hike results in the reduction of the purchasing power of workers and an increase in general poverty. There are 83 million poor Nigerians who live on less than N377 per day. For these citizens, a fuel price hike puts them on the brinks of survival.

The FGN and its Price Review Committee made a bureaucratic decision to hike PMs prices to N162/ litre under IMF pressures. This is very clear when we examine the constituent parts of their import parity pricing model. The import parity PMS price is the Expected Open Market Price (EOMP). The EOMP is the sum of the benchmark landing cost, the disribution margins and the taxes. There are no taxes on PMS in Nigeria. The distribution margins consist of the retailers, transporters and dealers margins. None of these margins are determined by market forces. They are all determined by government bureaucracies. Under the last Minister of State for Petroleum, Dr. Ibe Kachikwu, these margins were varied abitarily to accomodate the policy of PMS price modulation. 

The benchmark landing cost is made up of cost + freight, traders margin, lightering expenses, NPA, fianancing, jetty depot thru'put charge, storage charge,  bridging fund, marine transport average and admin charge. All the components of the benchmark landing cost, apart from the cost + freight, are determined by Nigerian government bureaucracies. Therefore when we break the PMS import parity price of N162 per litre down to its constituent parts, we find  that there are no invincible markets forces involved. The FGN bureaucracies decides the price of PMS by using the IMF import parity pricing model. This model underdevelopes the refining sector in Nigeria by wiping out our comparative advantage as an oil producing nation. It encourages Nigeria to export raw material (crude oil) and import processed goods (PMS). Our development presuppose that we export PMS rather than  crude oil by building more refiniries. 

The acceptance of the unrestrained dominance of market forces and no market intervention by the NLC and TUC leaders leads us to the second market. Labour power is a comodity in the labour market, just like PMS is a commodity in the petroleum product market. The labour power of a worker is his or her ability to do work. The labour market  has many sellers of labour power (workers) and few buyers of labour power (employers). The market is an oligopolistic buyers market. The price of labour power in the labour market is the worker's wage. The workers form trade unions to defend their interests. They struggle for higher wages and better conditions of work with the aid of their unions. Trade unions are therefore organs of workers struggles. Public sector workers have governments (local, state and federal) as their employees. When workers fight for higher wages, they are fighting as a class-in-itself. However, if workers fight for a general wage, like a national minimum wage, then they are fighting as a class-for-itself. In this case, the workers confront the government, not as employer, but as the state. They confront the state understood as a bourgeois organ of class rule/domination. They do not confront their individual employers. The struggle is political, a struggle between different classes to determine the minimum clearing price in the national labour market.

Under capitalism, work is the organizing tool of society. Work, understood as activities aimed at generating surplus value, does not occur only in the sphere of production (factory/office), but in the society as a whole. The society as a whole becomes a social factory organized around work, both waged and unwaged. The worker is paid for 8 hours of work at the office/factory. But, the worker and his/her family works after official hours inorder to reproduce their labour power or ability to do work. The worker works from the time he/she wakes up and until the time he/she sleeps. All the work outside the office/factory is unpaid. The worker has to turn on the PMS generator, collect water, take a bath, dress up, do the same for his/her children, prepare breakfast, grab a bus, drop the kids off at school, grab another bus, arrive at the factory/office for work on time. All this may take 3 to 4 hours. Then, he/she spends 8 hours working at the factory/office and repeats the 3-4 hours activities in order to get back home, eat supper, put the children to bed and get some sleep. In the case of students, farmers or small self employed businesses, the whole work is unwaged. All the workers’ (waged and unwaged) activities during the day cost money. The cost of these activities increases as PMS cost increases. Therefore, when the masses fight against a fuel prize hike, they are fighting for their economic self development; for more disposable income and leisure family time. They are fighting the FGN as the state, not as the employer of public sector workers. They are acting as a class-for-itself for their autonomous self development. Thus, when workers trade union seize conrol of the leadership of masses' struggle against fuel price hike, they are  not negociating with the Federal Government as employer of their members, but as the state, understood as an organ of bourgeoius power/domination. The union leaders represent, not just their members, but all Nigerian waged and unwaged citizens (students, market women, small businesses, farmers etc). It seems the trade union leaders negociating with the FGN did not understand this.

A strike is a tactical tool of class struggle used by workers to gain a power advantage during negociation with their employers or the State as a representative of the power of capital or bourgeois rule/domination. A strike is not a strategic tool of class struggle. It is always temporary and never indefinite. It is aimed at the temporary withdrawal of labour power from the sphere of production in order to bring production or the creation of surplus value to a halt. A temporary interruption of the circuit of capital and the production of surplus value at the sphere of production or the societyy as a whole put the workers' representatives in a more powerful position during negociation with the State. It does not make any sense to call off a national strike and capitulate to the ideology of the supremacy of some invincible hands of market forces in PMS price determination. Once trader union leaders agree to this in the petroleum product market, it will not take long for the state and employers to impose the same indeological framework on the labour market.

The logical conclusion of the ideological capitulation of the labour leaders in Aso Rock, is that the Nigerian labour market should, just like the PMS market, be governed by market forces without any trade union interventions. This implies not just the removal of automatic deduction of labour union fees from workers' wages, but also the removal of labour union interventions in the market for labour power. The FGN or the state, as an organ of bougeoius class domination, can deduct taxes from workers' wages at source. But, the trade unions, as organs of working class strugggle, cannot do this. This is the first display of bourgeois dominance and the State’s attempt to seize control of the labour market under the premise that it is governed by invincible market forces. Once this is successful, it is followed by the enactment of voluntary trade union membership laws and finally by Right-to-Work laws. Under Right-to-Work laws/rules, trade unions are not recognized as representatives of workers during negociations. If market forces govern the labour market, then there is no need for the intervention of trade unions in the determination of the condition of work or wages understood as the price of labour power. Each worker handles his/her wage negociation personally. They would not be required to belong to a trade union. This is the logical  conclusion of the acceptance of market forces as the determinant of the prices of commodities (PMS) in the petroleum products market and commodities (labour power) in the labour market. It is, on the long run, ideological suscide for the trade unions. This is why there was wild jubilation in the board rooms of Nigerian capital and the corridors of Aso Rock when the trade union leaders capitulated to the ideology of unrestrained invincible market forces and no market interventions. It will not be very long before the state (FGN) and the employers come for the trade unions themselves.

Izielen Agbon
Twitter: @izielenagbon
Nov. 3,  2020

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