Minimum wage: Balancing feasibility and fairness

According to the Bureau of Public Service Reforms (BPSR), approximately 720,000 Nigerians work at the federal level, while the overall population of Nigeria stands at about 218.5 million people as of 2022. The Nigeria Labour Congress (NLC) recently proposed a minimum wage of ₦494,000, sparking intense debate about its feasibility. 

If the federal government were to pay ₦494,000 as the minimum wage for these 720,000 federal workers, what would be the implications for the remaining 218 million Nigerians not employed by the government? These citizens also deserve the right to a decent standard of living. Moreover, there are states that have yet to implement the 2019 agreed minimum wage of ₦30,000. Expecting these states to now pay ₦494,000 seems unrealistic.

One of the critical concerns is inflation. An increase in the minimum wage to ₦494,000, which is more than 16 times the current ₦30,000, without a corresponding increase in Nigeria’s production capacity, could lead to severe inflation. 

This economic instability could mirror the crises experienced by countries like Zimbabwe and Venezuela. If businesses such as Dangote, Indomie, Nestle, Flour Mills of Nigeria, and petrol stations are required to pay their staff a minimum of ₦494,000, they would likely pass these costs onto consumers, drastically increasing the prices of goods and services.

There are also political undertones to consider. Critics argue that the NLC, led by Joe Ajaero, may be influenced by political affiliations, particularly their support for Peter Obi during the last election. This has led some to believe that the NLC’s current demands are part of a larger political strategy rather than a purely economic one.

From a practical standpoint, the  federal government should consider a more reasonable increase. A suggested minimum wage of ₦75,000 could be more attainable. While the organised private sector indicates they can only afford a minimum wage of ₦60,000, they might need to stretch their budgets to accommodate a higher figure.

If the government offers a substantial increase and the NLC still insists on ₦494,000, it would demonstrate to Nigerians that the government is making a good-faith effort, while the NLC’s demands may appear unrealistic.

It’s also important to consider the broader economic implications. If a level 1 civil servant earns ₦494,000, those in higher levels would require even more significant salaries, potentially bankrupting the nation. More money without increased production equals more economic problems.

Furthermore, any agreed-upon minimum wage should be subject to regular adjustments to account for inflation, ensuring that the wage remains fair and sustainable over time. This could help prevent future disputes and economic instability.

The situation in many northern states, such as Zamfara, Sokoto, Nasarawa, Katsina, and Niger, illustrates the challenges of implementing such a high minimum wage. These states, already struggling with poverty and the impacts of banditry, would find it nearly impossible to meet these demands without borrowing, further straining their economies.

In conclusion, the NLC and the Trade Union Congress (TUC) should aim for a reasonable and attainable minimum wage that both the federal and state governments can afford and sustain. While advocating workers’ rights is essential, demands must be balanced with economic realities to ensure long-term stability and prosperity for all Nigerians.

Abdulhamid Abdullahi Aliyu writes from Sokoto via [email protected], 08032592969