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Nigeria’s $50 a month minimum wage is among the lowest in the world. With regards to falling real wage, heightening pressure on consumer spending and fixing wage such that it is competitive internationally, how expensive should the proposed new minimum wage be?
It is widely expected that irrespective of what the Federal Government’s tripartite committee on the new national minimum wage recommends the new wage to be, it will be at least a hundred percent increase, raising national minimum wage to about $100.
A hundred percent increase will put minimum wage in Nigeria at level more than 100 percent higher than minimum wage in Ghana and 32 percent in Egypt both considered having better infrastructure, especially power.
Decrying the fall in real wage in Nigeria and how unimaginable it is to live on $50 dollar a month, the global chief economist and head of macro strategy Renaissance Capital, Charles Robertson, cautioned that the country’s wage should be as much as possible kept at a level that makes it internationally competitive.
Ayuba Wabba, President of the Nigeria Labour Congress, (NLC) had earlier stated the demand of labour for N56,000 minimum wage, sighting current inflation level in the country as one ofthe reasons for demanding upward review.
“The increase will defiantly happen sooner than latter especially given political considerations in the build up to 2019. The government will want to score some points” Afolabi, a labour leader told BusinessDay.
According to Tope Osanyingbemi, “an increase in minimum wage though justified has never really been the issue; the issue has always been for the government to provide basic amenities. You expect that by the time minimum wage is increased; other individual economic agents in the economy will react by also raising price. We then start talking about inflation”
He went further to state that “if everyone, including the taxi drivers and house owners then increase prices, would you then say we have achieved anything. What we have would be a nominal increase not real wage increase”
In 2015, of the N882 billon budgetary provision for borrowing, government borrowed N473 billion to meet up with recurrent expenditure, including salaries and overheads.
The Federal and State governments combined budget in 2017 was more than 13 trillion, and more than N6 trillion was allocated to be spent on salaries and overheads.
Currently states like Kogi owe workers salary arrears of more than ten months with the situation of workers in the state daily deteriorating and no visible end in sight.
A projected 100 percent increase will further decapitate the capacity of these states to pay salaries and allowances of workers.
Mhango, Yvonne, Renaissance Capital’s head of research, Sub-Saharan Africa, said “although an increase in minimum wage in Nigeria has implications for budget, increasing oil revenue should help mitigate impact on the budget”
“in term of wages generally, if you look over the past five years, real wages have fallen, part of why we have seen consumer spending come under pressure.
“So I think talks about wage increase, if implemented are a positive one for real wage and for consumerspending.”
Further asked if the planned increase is sustainable, Yvonne said “I think it is. Looking at our growth projections of 2.9 percent for Nigeria, I think the positive thing is that the economy will grow in the medium term.
“You can argue whether the growth will be at 3 or 6 percent, I think the most important thing is the economy will grow. So as long as the economy is expanding, even if oil price remain flat at current levels, the planned increase should be sustainable”
OLALEKAN IPELE
