BusinessDay

What is the real minimum wage?

Since 2011, lowest wage permitted by law in Nigeria is N18,000 (US$ 50). But now that it has been established that six Nigerians become extremely poor every minute in Nigeria, raising the minimum wage of workers may be the right thing to do. If a worker puts in an honest day’s work, he or she should be able to earn a living wage. So, the question is: What should be the minimum wage in Nigeria? It’s expedient to ask this question bearing in mind that the country is almost broke. More than fifty percent of the nation’s revenue is allocated to servicing debt annually.

Whether it’s politically expedient or not, Nigerians are divided on the minimum wage issue. There are those who believe that the minimum wage of workers in Nigeria must be increased to help the working poor. Their view is anchored on the premise that increasing the minimum wage will prevent families from raising their children in poverty.

Some believe that if the minimum wage is increased it would lead to inflation. With an increase in minimum wage, too much money will be chasing few goods resulting in inflation if there is no corresponding increase in productivity. Whatever is approved as minimum wage will be consumed by inflation as time progresses because.

Despite views expressed by those for or against an increase in the minimum wage, the FG has accepted tacitly to increase minimum wage from N18,000 to N30,000. By implication, the minimum wage proposal shows an increase of about sixty percent. If the minimum wage was to be increased by sixty percent, it’s doubtful if sales, particularly of those in the private sector, increases by equal percentage. So, one may say that employers of labor have no choice than the reduce their workforce.

Accordingly, the Nigerian Governors’ Forum issued a communique that state governments can only increase minimum wage from N18000 to N22,500. And that if the organized labor insists on the proposed N30,000 minimum wage, there will be massive sack of workers by state governments. In defence of their position, most state governors say that they will go bankrupt if they pay N30,000 minimum wage. Furthermore, governors say that they are not in government to pay salaries alone. Yes, governors are not in office to pay salaries alone, but their opposition to the proposed minimum wage of N30,000 is very disturbing to organized labor. A representative of the organized labour responded to the threat issued by the Governors’ Forum that “we are not discussing downsizing of the workforce or employment of workers. What we are discussing is the minimum wage. We want to know exactly what the minimum wage is. The issue of downsizing is collective bargaining. The issue should not be mixed.”

With profound respect to our governors, states will not go bankrupt because of minimum wage of N30,000. It’s high cost of governance that has crippled most of the states economically. The cost of maintaining a large number of “ghost” and real workers is high. There is always controversy when it comes to salaries of workers in the country. Yet, all political office holders at local, state and federal levels of government across the country earn the same wage depending on the office they occupy.

When wages of political office holders are to be paid, there is no debate. Most Nigerians have not forgotten the revelation by a former governor of the Central Bank of Nigeria, now the Emir of Kano, when he called for the reduction in the cost of governance in the country. He said that “at the moment seventy percent of the federal government’s revenue goes for payment of salaries and entitlements of civil servants, leaving thirty percent for the development of 167 million Nigerians.That means that for every Naira government earns, 70 kobo is consumed by civil servants.” The practical result of this huge cost of governance is that only about thirty percent of the nation’s total revenue is spent on capital projects. This is essentially the reason why capital projects are poorly funded resulting in either incompleteness or abandonment of projects across the country. That is why the government had to embark on borrowing to maintain its vast bureaucracy.

Those in favor of an increase in minimum wage must hold government at all levels accountable. The government according to the 1999 Constitution is mandated to control the economy, secure the maximum welfare, and ensure happiness of every Nigerian on the basis of social justice and equality of status and opportunity. It is the responsibility of those in government to manage and control the nation’s economy effectively. How can anyone reasonably accept the theory that a minimum wage of N30,000 (US$ 90) per month cannot be paid by Nigeria which is the largest oil producer in Africa. Whilst the federal government has tacitly approved the proposed minimum wage of N30,000, states governments have insisted that they can only afford N22,500. So, what is the real minimum wage?

For workers in Nigeria to earn a living wage, there must be a comprehensive staff audit and job evaluation to determine right size of civil servants at local, state and federal levels. The cost of maintaining the number of civil servants in the country is unsustainable. Efforts must be made to further amend the 1999 Constitution to reduce the size of the federal cabinet. The number of special advisers and special assistants serving in government must be reduced. The bogus salaries of governors and their pensions may have to be revisited. The annual pension for an ex-US President, according to a source, is about $257,800. An average pension for a “retired” Nigerian governor is $549,450.6 according to the same source. Yet state governments cannot pay N30,000 ( $90.0) per month minimum wage. This writer shares same sentiments with those who believe that the time has come to make necessary constitutional amendments to save Nigeria from bankruptcy.

 

MA Johnson

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