Nigeria’s Labour Organisations’ demand will cost over eleven trillion yearly

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==   By Wasiu Alli   ==

 The federal government’s wage bill will almost double at the very least if Organised Labour doubles down on the push for a 20-fold increase in the minimum monthly wage. With the proposed minimum monthly wage of N615,000, the government’s personnel costs for 1.5 million workers will rise from about N7 trillion at which it currently stands, to N11 trillion. Chief Ben Akabueze, the Director-General of the Budget Office of the Federation, said the cost of maintaining  government’s personnel was over N5 trillion, with 1.5 million workers on the federal government’s payroll.

The Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) are demanding that the country’s minimum monthly wage be increased by 1,950 percent from N30,000 to N615,000. The Union says it arrived at the minimum wage recommendation after painstakingly computing the monthly cost of living of Nigerian workers, with food and  transportation taking a chunk of the expenses.

According to a “cost of living estimate” released by the NLC, it will cost a Nigerian worker N9,000 to feed for 30 days, amounting to N270,000. Each worker is also projected to spend at least N110,000 on transportation in a month.

Meanwhile, the federal government has proposed N48,000, leading to a battle royale between the organised labour and the government. It is not, however, clear if the government is prepared to shift grounds, as the labour unions have continued to insist on N615,000 minimum monthly wage and as they have given two weeks ultimatum to states that are yet to implement the N30,000 wage.

Many analysts as well as other stakeholders have noted that while the pay increment is necessary given the high cost of food, accommodation, energy and other basic needs, the proposed wage by NLC/TUC may not be feasible.

As it stands, the federal government may need to raise a supplementary budget to accommodate any wage review, a recent report by the International Monetary Fund suggests. The IMF noted in its latest country staff report for Nigeria that the negotiated amount may surpass the budgeted amount in the original 2024 budget.

Olu Fasan, an author and social commentator in a column published by BusinessDay, argued that in many countries, the focus has shifted from the minimum wage to the living wage. He maintained that minimum wage impoverishes workers and entrenches a phenomenon known as ‘in-work poverty’, where people are in paid jobs but still can’t make ends meet. He advocated for a living wage as it is the only “antidote” to poverty.

Adeola Adenikinju

 

On the proposal of the organised labour, Fasan noted that the demand is not feasible but proposed N100-120,000 as a decent minimum wage. “Of course, the N615,000 per month that the labour unions demand is unreasonable. However, given that the government provides no basic amenities for the people and considering the limited coverage of any living wage, it’s hard to disagree with something within the range of N100,000–N120,000 per month,” he said.

Nigerian workers are paid a pittance relative to what their peers in Mexico, Indonesia and Turkey get as their minimum wage. At the end of every 26 working days, a low income earner in Turkey earns $578, 25 times more than what a Nigerian receives. Workers in Mexico and Indonesia earn $369.5 and $316 respectively. Turkey is able to pay such an amount because its government revenue to GDP ratio outstrips that of Nigeria, which means the Turkish government is richer than Nigeria.

According to data from the International Monetary Fund (IMF), Turkey’s revenue as a percentage of GDP stood at 26.41 percent in 2022. Mexico’s was 24.2 percent but that of Nigeria pales at 8.79 percent, which explains the low wages in Africa’s most populous country.

In Africa, Nigeria’s minimum wage still cannot match what a South African worker earns nor what a low income earner gets in Egypt. The lowest a worker can earn in South Africa is $242, more than 10 times higher than what is earned in Nigeria. The country’s government gets 27.75 percent as a share of its GDP compared with the low revenue generated in Nigeria. Adeola Adenikinju,  President of Nigerian Economic Society, said getting a wage review requires that both the government and labour unions map out certain objective criteria.

The professor of Economics said that in arriving at a minimum wage, one of the criteria to look out for is the cost of living and the level of inflation in the country. Additionally, he said the level of productivity of the nation is another factor that must be considered in a wage review. He maintained that another factor in arriving at a new minimum wage is affordability. Adenikinju argued that even with the rise to N30,000 in 2018, some state governments still cannot afford to pay.

“There should be some metrics used in arriving at a new minimum wage. You need some objective criteria that must be summed up to 100%. By how much has inflation, productivity and government budget risen to make up a new minimum wage,” NES president said.

Editor’s Note:

An average Nigerian family at the lower level consists of four members – father, mother and two children and about eight members at the upper level with parents and six children. Between them is a family of six. So, we take a family of six on the very average. Each member on an average of N500 a meal spends N1,500 a day for three meals. For a family of six, that would come to N9, 000 a day and N270,000 a month of 30 days. If the children are in school and the man and his wife are working, transportation could cost each at least N1,000 daily which is N180,000 monthly for a family of six. That is a monthly expenditure of N450,000 already. The family then pays rent of about N150,000 for their accommodation. That brings it to N600,000. Hospital bills, NEPA bills, Town Union bills and levies etc will make their own demands. Government cannot or will not like to spend this huge amount on its workforce. Neither will it want to cut down on the excessive pay of legislators and top officials of government. Meaning that corruption will continue to fester in the economy of the country for people to be able to make ends meet to some extent . Government should, therefore, approach this delicate dilemma precariously and realistically. Each side has to make sacrifices in the interest of peace and settle for N400,000 minimum monthly wage.     

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