Kingsley Moghalu, a former deputy governor of the Central Bank of Nigeria, said the country’s level of productivity cannot support a N400,000 or N500,000 minimum wage the organised labour is demanding.
The former presidential candidate in a statement on his X account on Tuesday recommended a minimum wage of between N75,000 and N100,000.
Organised labour and the federal government have been at loggerheads over a new minimum wage for a while.
The labour went on strike on Monday after failing to reach a compromise with the Tripartite Committee on minimum wage.
The industrial action paralysed economic activities across the country, forcing the government to call for an emergency meeting with the unions.
However, the protesting workers called off the strike for five days on Tuesday following a peace agreement with a delegation of the federal government led by George Akume, the secretary to the government of the federation, at a meeting on Monday evening.
Parts of the agreement include: the commitment by the government to pay a minimum wage higher than N60,000, the Tripartite Committee on minimum wage to meet every day for the next week, and no worker will be victimised as a result of the industrial action.
Initially demanding above N600,000, the labour has changed to N400,000 “living wage”.
Recommends between N75,000 and N100,000
Reacting to the development, Moghalu said the fundamental point in the national minimum wage debate is that the country has little or no productivity in the economy.
“In the debates on national wage in Nigeria, we miss the fundamental point: there is little or no productivity in the economy. If we had a truly productive economy there is no reason we can’t have the kind of minimum wage of 400 or 500K that Labour wants.
“But we can’t, because the level of productivity in the economy cannot support it. Remember, minimum wage is not just about government salaries. There are not more than 2, at most 3 million civil servants in Nigeria. It is even more about what is paid in the private sector, to household staff, etc,” he said.
The economist warned against minimum wage that could worsen the country’s inflation rate, recommending between N75,000 and N100,000.
He said, “All of this is why, all things considered, including avoiding a minimum wage that multiplies already ravaging inflation (assuming such a wage can even be paid), I recommend a minimum wage of between N75,000 and N100,000.
“Speaking about productivity, how productive is an average Nigerian worker? How skilled is he or she, and thus how much value does he or she create? I know we are all upset at our insensitive political class who do not care about the masses and only for themselves.
“But the economics of it all is far more complex. Sadly, it is quite obvious that the political will to reduce the waste in governance does not exist.”
When asked about how the economy can be more productive, “Human capital development. Skills that create value addition which is economically quantifiable. Wealth creation and profitability increases. Wages go up naturally. And, of course, the almighty ELECTRICITY,” Moghalu replied.
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