Minimum Wage Hike Faces Challenges in States Despite 134% Increase

After over six months of negotiations between the Federal Government and organized labor, President Bola Ahmed Tinubu finally resolved the impasse last Thursday, securing labor’s acceptance of a new national minimum wage of ₦70,000.

However, with inflation at a record high of about 34% and food inflation around 41%, the ₦70,000 monthly wage, equivalent to USD 46, may not significantly alleviate economic challenges.

The wage increase targets approximately 5.3 million direct beneficiaries of the new minimum wage and consequential adjustments. Despite the 134% increase, it is expected to have limited impact on improving the plight of Nigerian workers.

According to the National Bureau of Statistics (NBS), about 1.2 million Nigerians work for the Federal Government, 1.3 million work for state governments, and 1.8 million are in the private sector. All these workers will benefit from the wage increase and adjustments.

President Tinubu has assured that the minimum wage will now be reviewed every three years to reflect economic developments. The National Assembly has promised to ensure the early passage of the new Minimum Wage Bill, giving it accelerated hearings and passage once submitted.

Many states, however, argue that they may not be able to afford the new wage due to economic challenges and are pressuring the National Assembly to place the wage under the Concurrent Legislative list.

Ahead of the bill’s presentation to the National Assembly on Tuesday, July 23rd, the Nigerian Labour Congress (NLC) has threatened a showdown over plans to remove Section 34 from the Exclusive Legislative list to the Concurrent list. The move, backed by the Nigerian Governors Forum (NGF), National Assembly, and judiciary, aims to allow state governments to set their own minimum wage.

Joe Ajaero, president of the NLC, has vowed to mobilize workers to strike against this move. “The moment the House of Representatives and the Senate come up with such a law that will not benefit Nigerian workers, they will be their own drivers and gatemen, and there will be no movement for one month,” Ajaero said.

An informed source cited the National Assembly’s powers under Part 1, subsection 34 of the 1999 Constitution, which allows it to legislate a minimum wage for the federation. This legislation is binding on the Federal, State, and Local governments in Nigeria.

Throughout the negotiations, labor representatives walked out of the tripartite committee meetings three times to press for better wage provisions, rejecting initial government proposals of ₦48,000, ₦54,000, ₦57,000, ₦60,000, and ₦62,000 before settling on ₦70,000.

As of the weekend, it was unclear whether the promise by Nkeiruka Onyejeocha, Minister of State for Labour and Employment, to implement the new minimum wage by May 1, 2024, still stands. It is also uncertain whether the Federal Government will continue the ₦35,000 wage award given by the President from September 2023 until the new minimum wage bill is signed into law. The Federal Government is already behind on the wage award payments, with the last payment made for February 2024.

The wage award was initially intended to last six months, from September 2023 to March 2024. Onyejeocha made the promise on May 1st during the Workers’ Day celebration, assuring that the new minimum wage would take effect from May 1, 2024.

Etim Okon, vice president of the Trade Union Congress (TUC), confirmed that organized labor would press for the arrears during the bill’s public hearing in the National Assembly next week.

Sources close to the Presidency revealed that apart from the ₦70,000 minimum wage, President Tinubu also promised to provide labor with 36 new 100-seater buses to ease public transportation challenges. These buses will run on both compressed natural gas (CNG) and regular fuel.

Abdulrahman Abdulrazaq, chairman of the Nigerian Governors’ Forum (NGF) and Kwara State governor, expressed concerns over the feasibility of implementing the new minimum wage, citing the removal of fuel subsidies and meager increases in Federation Account Allocation Committee (FAAC) revenue to states.

The Organized Private Sector (OPS) had recommended a sum of ₦60,000, which the NGF rejected, arguing they could not afford it. Southern Governors suggested that each state should negotiate the new minimum wage with its workers to break the deadlock.

The OPS, represented by Adewale-Smart Oyerinde, director-general of the Nigeria Employers’ Consultative Association (NECA), argued that several sectors would suffer if the minimum wage were set too high without considering sustainability. They proposed ₦60,000 monthly, an increase of 100% from the current minimum wage, but feared MSMEs would struggle to align with anything above ₦60,000 due to existing government policies and economic pressures.

In response, NLC president Joe Ajaero accused the government and employers of using the ability to pay as a blackmail tactic, noting that even the old ₦30,000 minimum wage had not been fully implemented by many states after five years.

Ajaero emphasized the need for proper justification for the wage adjustments and stressed that labor would continue to monitor and respond to the governors’ actions regarding the new minimum wage.