Upward Review From N18,000 to N30,000 Minimum Wage For Nigerian Workers – A Laudable Step or Long Overdue?

Alao Abiodun
20% Complete
 21-Mar-2019

In corroborating the words of the dictionary, Wages are the remuneration or earnings expressed in terms of money and fixed by mutual agreement or by law which are payable by virtue of a contract by an employer to a worker for work done or to be done or for services rendered or to be rendered.

In Nigeria today, the minimum wage dilemma has been a subject of discourse over the years now despite the negotiations between Labour and the federal Government, the coast is still not clear for workers yet, even with the news of purported increase in monthly wage.

Currently, the Nation’s minimum wage is pegged at N18,000 and this is however long overdue for review since 2011. 8 years down, the Nigerian Labour Congress (NLC) and other organized Labour are still struggling to get an upward review in the minimum wage.

Meanwhile, Nigerians have spent the last decade complaining that the minimum wage doesn’t reflect the realities of inflation and has helped plunge Nigeria into extreme poverty. while it is no longer news that Nigerian workers are one of the most poorly paid on the continent and the world at large, the poor payment and also non-availability of conducive working conditions are also part of the yearnings of the Nigerian workers.

Read Also: Senate Approves N30,000 Minimum Wage For Nigerian Workers

When one sees the exotic and expensive lifestyles of elected officials compared to that of their citizens, the difference is clear. They travel in convoy of bullet proof vehicles, earn several allowances even while they sleep, have access to best medical services outside the country, send their children to ivy league universities and they leave office with several bounty severance packages with nothing left for the workers.

The current national minimum wage of N18,000 was calculated based on the cost of living calculated by trade unions based on inflations and statistical data from the national bureau of statistics. Hence, the issues around a new minimum wage are as diverse and complex as the parties involved, as such, a lot will go into its consideration across the country. The biggest concern is that our dear politicians have simply prolonged the tough decisions.

In 2011, the minimum wage of 18,000 Naira was equivalent to about US$110, today it is worth less than US$50. This is below the poverty line, and the NLC claimed it was the lowest minimum wage on the continent. The middle class with stable income is shrinking and the numbers of working poor are expanding. At the same time, the costs of living is fast increasing with inflation, illustrated by the fact that foodstuff like cereals, cooking oil and even spices, are now sold in daily portions.

The new minimum wage of 30,000 Naira (US$83) is in real terms it lower than the 2011 minimum wage at the time of agreement (US$110). The Workers were represented at the tripartite negotiations through NLC, the Trade union congress (TUC) and United Labour Congress (ULC). The (original demand of the NLC and TUC was 66,500 Naira (US$181), while the ULC (which is not recognized by the federal government) demanded 96,000 Naira (US$264). By comparison, the 1981 minimum wage of 125 Naira was worth US$200.

However, when the ruling APC party called the tripartite forum—consisting of representatives of workers, employers and the state—for minimum wage negotiations as of December 2017, it was long overdue. It also came after continuous calls from the unions. Nevertheless, the process has been stalling.

It should be recalled that on November 22, 2017, President Muhammadu Buhari approved the appointment of a 30-member committee to work out a new minimum wage. The three negotiating union centers NLC, TUC and ULC have been frustrated by the government, and threatened strike on several occasions. The government held back the conclusion, not only because “they cannot afford” an increase, but allegedly also to conclude the deal after the national elections in 2019 just o gain popular support.

After the tripartite forum concluded on November 6th, the opposition presidential candidate, Atiku Abubakar (PDP) promised workers 33,000 Naira minimum salary in his private businesses and a living wage if elected. (Atiku’s claim to employ 100,000 workers was hotly contested on social media)

To further complicate matters, the non-payment of workers is “the other side of the coin to Nigeria’s notorious ‘ghost worker’ problem.” Ghost workers are people who are on the public payroll, but are not to be found in the public offices, either because they are dead, retired or have better things to do. They are found at both the federal and state level. Earlier this year, the Economic and Financial Crimes Commission (EFCC) claimed there were 62,000 ghost workers on the federal payroll.

It is also important to think of how the new minimum wage would evolve in the rest of the economy. In the private sector where over 80% of working Nigerians are employed, the implementation of the new minimum wage may suffer. This is because the economy is yet to fully recover from the shocks of economic recession, and this could mean slower wage growth.

Besides, a large informal sector like Nigeria would make minimum wage increase very difficult to implement and enforce due to lack of enforcement. Theoretically, in countries with a large informal economy, increased minimum wage in the formal sector could further boost informal employment sector.

While Civil servants in Nigeria are eagerly awaiting and anticipating a favorable wage increase after years of enduring a ridiculous and lowest wage structure our public office holders, including members of the bicameral parliament are enjoying the biggest wages in the world according to a classified report.

Economic Implications of Minimum wage Increase

From an economic perspective, increasing the minimum wage drives household consumption across the country and produces room for investments. It could also affect employment as the government will be looking at their wage bills across the three tiers (Federal, State and Local) particularly at a time when there are challenges in revenue.

Some States have experienced challenges in paying the N18,000 minimum wage and analysts are worried about how they will cope with the new wage. There will be tough choices ahead for the Federal Government who from the political-economic angle will not want labour issues.

On one hand N18,000 is no longer tenable for the workers in Nigeria, while on the other leg the N30,000 minimum wage should be negotiated to a level that all Federal and States can apply with clear timelines.

In this regard the Federal Allocations Accounts Committee(FAAC) principle will have to be reviewed to empower the States, currently the Federal has 52% share, States 27% share and Local Governments 21% share.

House Approves N30,000 Minimum Wage

The House of Representatives have amended two provisions of the New National Minimum Wage Bill forwarded to it by President Muhammadu Buhari, and approving N30,000 as the lowest wage payable to workers in the country.

By the decision, the House has overridden the National Council of State which had approved N27,000 as the new national minimum wage for Nigerian workers.

In a swift reaction, the Nigeria Labour Congress (NLC) has welcomed the passage of the N30,000 new minimum wage bill, urging the Senate to quickly align with the House of Representatives to adopt the amount as the new national minimum wage.

While the minimum wage bill was passed for third reading, the 2019 Appropriation Bill was also passed for second reading and referred to the standing committees led by the Committee on Appropriations for further legislative action.

The green chambers held a public hearing on the new Minimum Wage Bill on where the organised labour, workers in the civil service and the private sector made contributions on the bill sent to the National Assembly by President Buhari.

Though the clause 3(1) of the bill had provided that “As from the commencement of this bill, every employer, except as provided for under the bill, shall pay a wage not less than a national minimum wage of N27,000 per month to every worker under his establishment,” the ad-hoc committee presided over by Deputy Speaker, Hon. Lasun Yusuf and which had the Speaker, Hon. Yakubu Dogara and other members of the committee in attendance recommended N30,000 minimum wage.

Also clause 10(2)(a), which provides that “Any employer who fails to comply with the provisions of sub-clause (1) of this clause commits an offence and is liable to (a) a fine not exceeding N5,000 (b) an additional penalty not exceeding N10,000 for each day the offence continues,” was amended.

Rather than the N5,000 recommended by the presidency, the committee recommended “a fine not exceeding N75,000 while the (b) part was retained. The National President, Nigeria Labour Congress, Ayuba Wabba, who addressed the ad-hoc committee on behalf of workers had pressed for amendment of five clauses in the president’s minimum wage bill.

First and foremost, the workers wanted N30,000 minimum wage, insisting that it was the position collectively agreed upon by the tripartite committee set up to look into the issue of the new minimum wage.

Though they agreed to a four-year circle for the review of the wage, they wanted periodic reviews in case of a major economic issue that will reduce or affect the value of what may be the current minimum wage. They also wanted the issue of threshold that says employers with less than 25 employees could be exempted removed and that future reviews should be done by a tripartite committee as was done previously.

The lawmakers were unanimous in their support for the N30,000 recommended by the ad-hoc committee.

Senate Approves N30,000 Minimum Wage For Nigerian Workers

The Senate has also rounded off debates on the 2019 Appropriation Bill, passing N30,000 as the new minimum wage for workers.

The passage attracted appreciation from the Nigerian Labour Congress, which gave kudos to the red chamber of the National Assembly.

But the federal government yesterday indicated that it might increase Value Added Tax (VAT) by 50 per cent to enable it pay the new pay package, which indications from the Nigerian Governors Forum (NGF) last night show that the state governors may accept to pay.

The proposal to jerk up VAT before the end of 2019 with a view to properly fund the national minimum wage was made public by both the Minister of Budget and National Planning, Senator Udo Udoma, and the Chairman of the Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, during an interactive session, with the Senate Committee on Finance headed by Senator John Enoh, on Medium Term Expenditure Framework (MTEF) for the 2019 budget.

Udoma and Fowler claimed that the federal government was considering an upward review of the five percent currently charged as VAT by 50 per cent to enable it to fund the new national minimum wage.

Udoma also emphasised that the Technical Advisory Committee on minimum wage, would submit its report to President Muhammadu Buhari this week.

He added that government would soon approach the Senate over the possibility of increasing VAT to fund the new minimum wage.

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