Fashola: NASS Only Has Power to Legislate Minimum Wage, Not Salaries

Former Minister of Works and Housing, Babatunde Fashola, has clarified that the National Assembly (NASS) can only legislate on the minimum wage for workers, not their salaries. In an article titled “Minimum Wage Review – My Takeaway,” Fashola explained that the Nigerian constitution limits the NASS’s legislative powers to the minimum wage, which is listed on the exclusive legislative list.

Fashola elaborated that while salaries are fixed amounts paid over a period of time, wages are payments made by the hour. He made these remarks amid ongoing negotiations between organized labor and the federal government regarding an increase in the minimum wage.

Currently, the labor union is pushing for an increase in the minimum wage from N30,000 to counteract the rising inflation that has severely affected Nigerians. Initially, labor leaders demanded a new minimum wage of N497,000, which they later reduced to N494,000. However, with the federal government rejecting this proposal, the union declared a national strike. Subsequent negotiations led to the federal government offering N62,000, but the labor union has insisted on N250,000.

In his article, Fashola emphasized the need to amend the Nigerian constitution to allow for the fixing of minimum salaries, not just wages. He referred to his monograph, “The Nigerian Public Discourse: The Interplay of Empirical Evidence and Hyperbole,” where he pointed out that item 34 of the Exclusive Legislative List specifically mentions “minimum wage” and not “salaries.” He argued that wages and salaries are fundamentally different and should not be conflated. Efforts to improve the minimum wage should focus on wages alone, without inadvertently causing a salary overhaul.

Fashola noted that Section 3(1) of the Minimum Wage Act, which prescribes a minimum monthly wage of N30,000, may be unconstitutional as it effectively legislates on a salary rather than an hourly wage, which is within NASS’s purview. He stressed that this distinction is crucial, especially as the minimum wage discussion continues in 2024. According to Section 3(4) of the Act, the minimum wage should be reviewed in accordance with the Act’s provisions, which includes Section 3(1) that prescribes a monthly amount instead of an hourly wage.

To adhere to the proper definition of wages as an hourly rate, Fashola suggested using the global method for computing wages. This involves dividing the gross annual sum by 52 weeks and further by the recommended 40 hours per week. By this calculation, Nigeria’s minimum wage would not be N30,000 per month, but N173.07 per hour (N30,000 x 12 months ÷ 52 weeks ÷ 40 hours).

Fashola concluded by stating that the current practice of fixing monthly minimum salaries as wages has led to consequential adjustments for all other salary earners, resulting in a bloated compensation structure that employers struggle to sustain. He emphasized that both high and low-income earners in Nigeria deserve adjustments in their salaries and wages due to the rising cost of living.