See the total numbers of Workers that Will Benefit from Nigeria’s New Minimum Wage
Recent data indicates that only 5.3 million Nigerians employed in the formal sector will benefit from the newly proposed minimum wage. This is out of Nigeria’s total population of 229 million and its 76 million-strong workforce. Analysts note that various factors prevent all workers from reaping the benefits of the wage hike.
A quick calculation by the National Bureau of Statistics (NBS) reveals that 1.2 million (23 percent) are federal government employees, and 0.3 million (6 percent) work for government-owned enterprises. Additionally, 1.3 million (25 percent) and 0.7 million (13 percent) are employed by state governments and local government areas, respectively. The remaining 1.8 million (34 percent) are part of formal private sector organizations.
Experts argue that while civil and public servants deserve better pay, addressing the wage issue requires reducing living costs and fostering a business-friendly environment, which would enhance the livelihoods of millions living in poverty. Unlike advanced countries, Nigerian civil servants’ earnings often support the wider population, as the country lacks robust safety nets for the unemployed or those who have lost their jobs. Retired individuals also face difficulties due to insufficient state support.
Despite agencies meant to provide such interventions, they fall short of the ideal. Many Nigerian public servants resort to borrowing or other means to supplement their incomes to cover basic needs like food, shelter, healthcare, education, and transportation.
The current minimum wage, set at N30,000 since 2019, has been significantly eroded by inflation, which has risen by 276 percent since then. This has led to calls for a higher salary structure.
### Nigeria’s Poor Minimum Wage Ranking in Africa
According to Professor Kemi Okuwa of the Nigerian Institute of Social and Economic Research (NISER), Nigeria ranks 44th in Africa for minimum wage levels. Of the 76 million workers in the country, only 5.3 million (6.9 percent) are in the formal sector and earning wages, making them the primary beneficiaries of any wage increase. The issue of minimum wage remains contentious, with disagreements between various levels of government and organized labor.
The federal government’s offer of N62,000 as a new minimum wage has been rejected by the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC), while the Nigeria Governors Forum (NGF) and the Association of Local Governments of Nigeria (ALGON) claim they cannot afford this amount. Labor unions argue that anything less than N250,000 would not suffice as a living wage.
### Government and Private Sector Wage Dynamics
Dr. Afolabi Olowookere, Managing Director and Chief Economist of Analysts Data Services and Resources (ADSR), predicts that despite differing views on the new wage structure, a compromise will be reached, resulting in more money for workers. However, he cautions that merely increasing wages without addressing productivity and living costs will not solve underlying issues. The private sector, being largely informal, may not fully benefit from such increases.
Dr. Olowookere emphasizes that raising salaries for a small group of workers must consider the broader population dependent on them and those in the informal sector who do not earn minimum wages. Without unemployment benefits, the overall economic impact is complex.
### Challenges for State Workers
Attention is also needed for state workers, especially since some states have not yet implemented the existing N30,000 minimum wage. An analysis shows that many states use all their Internally Generated Revenue (IGR) for salary payments, relying on federal allocations to meet their obligations. Increasing wages could further strain these budgets, with 15 states still not implementing the current wage agreement.
### The Path Forward
Dr. Olowookere suggests a sustainable approach of increasing productivity and reducing living costs to ensure wage gains are not eroded by inflation. Without improvements in productivity and infrastructure, any wage increase might soon lose its value due to rising living costs.
### Avoiding Wage Politicization
Dakuku Peterside, a public policy analyst, highlights the complexities of implementing new salary structures. He warns against politicizing wage issues, as improper handling could lead to cyclical inflation that negates wage increases. Careful consideration of economic conditions and social equity is essential to avoid undermining the intended benefits of wage hikes.
