• Wednesday, July 24, 2024
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LBS director calls for increased salaries before fuel subsidy removal

Franklin-Ugwu_1

Franklin Ngwu, Director of Public Sector Initiative at the Lagos Business School (LBS), has called on the government at all levels, including the private sector, to increase the salaries of their workers as a way to cushion the impact of the impending May fuel subsidy removal.

Added to the increases in salaries that the university administrator, who is also an economist, suggested, he urged the government to divert the money saved from the subsidy removal to critical areas of the economy such as transportation, infrastructure, education, healthcare, and so many others.

He suggested these solutions when he appeared on Arise TV’s Sunday interview programme to provide more insight into the fuel subsidy administration and the impact its removal would have on Nigerians.

Read also; Fuel subsidy removal: Buhari plots pay rise for civil servants

“It is quite interesting and touches on so many issues. However, if you look at the current budget—the last year’s budget—and see what we are going to use to pay for fuel subsidies, you will agree that it has to go,” Ngwu said. “Because it is a waste on the government and a waste on the economy, so it has to go.”

He asked that the most important question that should be on the mind of policymakers is “what do you do to address the consequences of the removal?”

To buttress his point further on increasing workers salaries before the removal of fuel subsidies, he said that from a study his organisation did in 2019, they found out that the minimum wage of N30,000 has significantly lost its real value, so much so that the same amount of money is now valued at N20,000 in 2022. Inflation is being fingered as the major cause of this.

He said, “With regards to increasing workers’ salaries by 10 percent, we did a study that found that in 2019, the minimum wage was N30,000, and in 2022, N30,000 is equivalent to less than N20,000. So inflation has already eroded that N30,000 minimum wage.”

He added that as a moral obligation, taking into account the challenges most families are facing, employers, especially the government, have to increase workers’ salaries.

“Even without removing fuel subsidies, we are supposed to increase workers’ salaries. The value of the money you are receiving has almost been eroded,” he said.

However, he argued that the removal of fuel subsidies wouldn’t be the ultimate solution to cushion the effect because, according to him, “even if you increase it (salaries) by 10 percent, will it cover the removal and effect of all that? To my assessment as an economist, the answer is no.”

“However, something has to go. I believe that if they remove the subsidy, there has to be a detailed plan in terms of addressing the negative consequences of the removal of the subsidy.

 

“One will include increasing workers’ salaries, and more importantly, how do we use the money we are using for subsidies to address critical areas of our economy—infrastructure, health, education, and others—so that people who are paying higher costs will see the true value of government in addressing some of these issues,” he said.