A Babel of minimum wage voices 

Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) are locked in a grueling duel with the federal government over minimum wage. With food inflation sailing perilously close to 40 per cent, the current minimum wage passed into law in 2019 has become “starving wage”.

In reality that is what the minimum wage of N30,000 per month amounts to. The average Nigerian family is made up of seven members (five children and two parents). A 50kg bag of rice is just enough for the family in a month. Ironically even if the family has to dedicate all its income to rice alone, N30,000 can no longer buy half a bag of rice which on its own cannot feed the family for a month.

That probably explains the Babel of voices within the labour camp as NLC and TUC flaunt ridiculous minimum wage figures. The federal government is curious about developments in the bargain for the new minimum wage. But state governors are even more worried. Some state governments have still not fully implemented the N30,000 minimum wage. 

Consequently, they have sounded stern warnings to the negotiators on the need to arrive at a realistic and practical minimum wage that reflects the state of the Nigerian economy.

The figures flaunted by the committees from the different political zones may not allay the fears of the embattled governors.

The NLC demands N794,000 as minimum wage for the South-west which includes Lagos, Nigeria’s richest state. The committee in the South-east wants a minimum wage of N447,000. For the South-south zone, the demand is even more outrageous. 

Apparently, because it produces the bulk of Nigeria’s crude oil which accounts for 90 per cent of Nigeria’s export earnings, the zone demands a minimum wage of N850,000.

The demand for the North-east is N560,000, while the North-west wants a seemingly modest minimum wage of N485,000. The irony of the stupendous figures submitted by the various zonal committees is that they are all working with the terms of reference which include the fact that they should submit a minimum wage figure within the context of the dynamics of the nation’s economy and that the figures must be realistic and practical. 

Many contend that the figures emerging from the committees are neither realistic nor practical given the state of Nigeria’s economy.

The truth is that the figures are a true reflection of the extremism of labour union negotiators who negotiate from top to bottom. No one knows precisely what the federal government would offer in the face of food inflation standing menacingly at 37.9 per cent.

Nigeria’s headline inflation rate was 11.4 per cent in 2019 when the current minimum wage was signed into law.

It now stands at 31.7 per cent. Inflation is almost three times what it was five years ago. If inflation is a key determinant of the new minimum wage, the sum of N95,000 could be adjudged as acceptable minimum wage for 2024.

The truth is that N95,000 may not be a living wage in Nigeria given the level of profiteering in the economy. However, it may be a realistic and practical minimum wage due to low productivity.

The problem with minimum wage in Nigeria is that it creates more problems for consumers than it solves. Manufacturers and service providers would make considerable price hikes before paying the new minimum wage.

Wholesalers and retailers are anxiously waiting to take a pound of flesh from workers as soon as the new minimum wage is announced. 

Everything put together, we may have a five per cent spike in inflation rate when the new minimum wage is announced. That takes the worker perilously close to the level of his purchasing power before the wage increase.

The greatest losers in the minimum wage saga are the millions of workers in Nigeria’s unwieldy informal sector who may never get the new wage but buy in the same market with those who get. Graduates in thousands of private schools strewn across Nigeria are paid N15,000 monthly under the current minimum wage. They may never get more than N20,000 if minimum wage moves to N95,000. Workers in this group are in dilemma.

In the absence of a social security system unemployed people would be the greatest casualty of the new minimum wage. They are defenseless. A new minimum wage would touch-off more inflation wave because the federal government believes that prices are determined by interplay of the invisible hand of the market forces of demand and supply. 

Unfortunately, Nigerian manufacturers, wholesalers and retailers are too greedy to allow market forces of demand and supply to fix prices. They have usurped that function and set inflation accelerating at an alarming rate.

For workers to get something above starving wages, Nigeria’s income distribution system must be drastically adjusted. A skewed income distribution system is what makes Nigeria, with its enormous natural wealth, the world headquarters of poverty.

The income distribution system inadvertently and illegally concentrates a disproportionate chunk of Nigeria’s enormous wealth in the hands of a few thousand politicians and top civil servants.

The pay of members of the National Assembly is higher than that of the president of the United States of America (USA), the world’s largest economy. 

Former state governors collect a minimum of N600 million along with houses as severance package at the end of four years of service to the state. They get a minimum of N1.2 million as monthly pension for life.

A civil servant who spent 35 years in the service of the state and rose to level 16 before retirement may be fortunate to get N12 million as gratuity. In Lagos he gets nothing. States still paying gratuity keep retirees waiting for five or seven years for the pittance.

Former governors get their own the day they leave office. Besides, their monthly pensions are paid promptly. That gross inequity must be addressed for every state to pay the new minimum wage.