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ASUU SALARY Stoppage and Recession in Nigeria by Muhammad Shamsuddin
Also Read: ASUU STRIKE: ASUU Set To Call Off Strike Agrees To Receive N70bn
Muhammad Shamsuddin made us to understand that:
It is no longer news that Nigeria plunged into recession in Q3 with GDP growth rate as -3.62%. The economic downturn in Q2 (-6.10% growth rate), was certainly triggered by the (un)popular lockdown policy resulting from the rampaging effects of Covid-19 pandemic. However, the policy had been relaxed since the beginning of Q3 (month of July) which should have paved the way for rejuvenating the economy.
Obviously, with the opening up of the economy in Q3, the economy should not have contracted beyond what was obtained in Q2. The worst that should have happened was to maintain the Q2 output. To put it differently “the recession was avoidable”. Regrettably however, the economy shrank. Apparently, some other obnoxious factors must have contributed to that contraction.
It is on record that loyal members of ASUU in Federal universities have not been receiving their lawful remuneration packages for at least 5 months now (some have not received for 9 months). This salary stoppage was caused by embroil between the FGN and ASUU over IPPIS. This is no news too.
The popular Keynesian conviction posits that in a recessionary epoch public sector spending (the “G” component) must play a striking role and score enough goals to avoid economic relegation. These goals manifest in paying workers remuneration and subsidy to boost purchasing power, giving tax holidays or reliefs to enhance production, and embarking on favourable public projects for more jobs. Contrarily, it is at this crossroad that the salaries of those lecturers were stopped.
. Majority of the academics form part of the middle class with very high propensity of consumption (MPC). A sizeable number of them are basically on spendthrift, consuming all what they earn (MPC=100%). For those that go frugal, they only save less than 20% of their incomes (MPC>=0.8) in most cases. Lecturers make purchases in the neighborhood markets, across the country and virtually in all sectors. They spend on airtime for internet, calls and satellites. They pay for publications, transportation and recreation. They also cater for their families, relatives and friends. Some of them even pay tithes. When schools were reopened in July and September, these lecturers would have paid for the school fees of their children and wards. One can imagine the multiplier effects that all these would have created. Unfortunately, all these activities and more could not have taken place, and recession followed.
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. Numerically, for instance, a senior lecturer (SL) with MPC of 0.8 (multiplier=5) might be able to create N1 million worth of economic activities (N200,000×5) in a single month. That would have been how much in the 5 months? If there were Ten thousand of them in the country they would have created about N50 billion worth of income. Now imagine the value to be created by those in the lower cadre who presumably have higher MPC due to lower income, then you replicate same for those in the Professorial cadre who normally earn higher and spend bigger. Believe me the value to be created might run into few hundreds of billion. However, government, alas, decided to keep such monies idle in its purse while the economy suffocates, for the simple disagreement which could have been resolved through dialogue, while the economy of the lecturers thrives. These reasons and more certainly caused the recession.
Conclusively, salary stoppage of ASUU members does not affect them alone but the overall economy, and contributed immensely to economic quagmire which the country finds itself. Policy makers must understand this for an informed decision.
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