Nigeria’s 774 local government chairmen have said the councils lack the financial strength to pay the proposed N62,000 let alone the N250,000 organised Labour is insistence on.
Speaking on behalf of the Association of Local Governments of Nigeria (ALGON) on Thursday, Aminu Muazu-Maifata, the chairman, said local government cannot afford the wage due to financial constraints.
He said the allocation to the local governments from the Federation Account were meagre, stressing that they receive only slightly above 18 percent of the total revenue accruing to the Federation Account, while the Federal Government receives more than 52 percent.
“With the present allocation from the Federation Account, no local government council in Nigeria can afford to pay N62,000,” he said.
N62,000 is the proposed amount as agreed to by the Federal/State Governments and the Organised Private Sector (OPS) at the conclusion of negotiations by the Tripartite Committee but Labour differed, pushing for N250,000.
“Presently, 90% of our inflow from the Federation Account goes into salaries and pensions. Without an upward review of the percentage of allocation to local government councils, it will be extremely difficult or even impossible for them to pay a N62,000 minimum wage,” ALGON chairman added.
Muazu-Maifata, who is chairman of Lafia Local Government, Nasarawa State, appealed for understanding and assistance from higher authorities, noting that local governments would have to turn to governors and the Federal Government for financial augmentation, if a new minimum wage law is enacted.
He said councils perform multiple functions beyond salary payments, adding that these obligations should be considered when determining an affordable and sustainable minimum wage.
According to him, the roles include the provision of basic health services, education, sanitation, security, rural roads, potable drinking water, and rural electrification.
Muazu-Maifata called for a collaborative resolution of the wage crisis among the Organised Labour, states and the Federal Government.
He said: “We are watching and hoping that an agreeable result will be reached. Local governments are prepared to comply with any legally enacted minimum wage, but require financial support to do so.
Meanwhile, Bismarck Rewane, the chief executive officer of Financial Derivatives Company warned that without a corresponding boost in productivity, the proposed increase in minimum wage could spell economic disaster for the country.
“The issue with minimum wages is that increasing them without a parallel rise in productivity due to infrastructural challenges like power shortages could effectively be tantamount to printing money,” Rewane stated.
He emphasised the urgency of addressing productivity alongside wage hikes to maintain economic stability.
“It’s not just a matter of agreeing on numbers; it’s about balancing wages against national productivity and welfare,” he added.
He called for a collaborative approach to resolving the crisis to mitigate escalating economic risks.
Rewane stressed: “We need credible negotiations that consider the broader economic implications.”
In his Democracy Day national broadcast, President Bola Ahmed Tinubu on Wednesday announced plans to send the agreed amount to the National Assembly for legislative action.
He stressed that the federal government will pay what the country can afford, however the organised labour has disputed the claims of the president saying “there is no agreement yet”.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
