BusinessDay

Nigeria’s economic reality makes mockery of N30,000 minimum wage

 

In a global work environment, the reward for labour is wage or salary. Labour, a service rendered, is usually exchanged for monetary benefit. There is the minimum benchmark for salaries, wages, and fees depending on the nation and the nature of the job.

While some jobs have more incentives or remuneration than others, individuals try to maximise their ability to earn more. In Nigeria, there was serious agitation in 2018 by the Nigerian Labour Congress (NLC) and Trade Union Congress (TUC) to demand an upper review of salaries of an average Nigerian worker to conform to economic realities at that time.

In April 2019, the Federal Government finally approved and signed the N30,000 minimum wage as the minimum benchmark for any worker in Nigeria. This implies that N1,000 was approved per calendar day for days in a month. This was meant to be an upgrade from an initial N18,000 to be the initial benchmark in 2009 till 2019.

It remains to be seen if this meagre sum that held sway in 2019 is still sustainable in 2022 based on economic changes, particularly assessing the present level of inflation, exchange rate, and poverty rate in Nigeria. Analysts are concerned over the welfare of an average Nigerian in being able to meet his/her needs.

Currently, the level of inflation is 15.6 percent. Data according to the International International Monetary Fund (IMF) in 2021 indicate that a high level of inflation was largely responsible for pushing an additional 9 million Nigerians below the poverty line, bringing the level of poverty to 91 million Nigerians, representing 42.8 percent of Nigerians total population.

Inflation will imply a reduction in disposable income and purchasing power parity (PPP) of an average Nigerian worker. Food inflation is at 17.37 percent, which has been caused by insecurity that has affected farmers and logistics through road transport, global disruption of supply chain caused by COVID-19 pandemic, and climate change impact.

A good percentage of worker salaries are spent on food, indicating that an increase in the price of food in the market will reduce the spending power on other vital needs.

The high level of inflation has affected the cost of housing, either purchasing or renting. The value of building materials implies workers will spend more income on housing, considering the poor status of the National Housing Scheme for workers in Nigeria.

Assessing how a public servant earns N2,400,000 million per annum (N100,000 monthly), when divided by 365 days of the year, it indicates that his average income per day is N6,500. How N6,500 will meet the food, housing, electricity and medical bills, transportation, fees of children/wards, and other minor needs of the worker per day is a miracle, considering the cost of these items that have all doubled between 2019 up till date.

The N30,000 minimum wage was negotiated when naira was exchanged at N362 to a dollar, inflation stood at 11.6 percent and the rate of poverty is currently at 40 percent. Now, a naira is exchanged at N419 to a dollar (official rate), the inflation rate is 15.6 percent, and the poverty rate is 42.8 percent. The welfare of an average Nigerian worker has depreciated greatly, while the development indicators above appear to worsen.

Exchange rate fluctuation has worsened the economic stability of the country, especially for a consuming economy with a low level of production going on in the economy. The present N30,000 minimum wage when divided by the current exchange rate of N419 to a dollar, amounts to $72 per month and $2.3 per day which is close to the World Bank poverty benchmark of $1.9 per day.

The poor welfare of an average Nigerian worker is contributing greatly to the influx of Nigerian experts in the field of health, education, information, communication and technology, and engineering to Europe and America in search of better and improved working conditions with largely sustainable minimum wage.

Read also: What Nigeria can do in 18 months to curb inflation, boost economy

The recent announcement by the Academic Staff Union of Universities (ASUU) to embark on a month-long warning strike over the government’s failure to implement the past agreement is simple evidence to further support this piece.

Government must improve the economy and ensure these welfare and development indicators are strengthened as quickly as possible or get ready for an upper ward review of the present minimum wage that is clearly not sustainable.

Beyond the salaries of an average Nigerian worker, the government must revive and ensure the inclusion of more workers into the housing and health insurance scheme, access to credit facilities, prompt payment of salaries, pension, and gratuity.

The welfare state of Nigerian workers could fuel corruption in the civil service, while states who are yet to implement the minimum wage agreement since 2019 should do so to improve the status of their workers.

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