As workers eagerly anticipate the implementation of the new ₦70,000 minimum wage, many will be disappointed to learn that not all are eligible for this pay raise.
Who is Excluded and Why?
An investigation reveals that the Tripartite Committee on the New National Minimum Wage, which concluded its work on June 5, 2024, has identified specific categories of workers who will not receive the new minimum wage.
The 10-member sub-committee, which included Minister of State for Labour and Employment Onyejeocha Nkiruka, Governor Mohammed Bago of Niger State, labor leaders, private sector representatives, and members of the National Salaries Incomes and Wages Commission, recommended lowering the minimum employee threshold for employers from 25 to 10 workers as per the now-repealed 2018 Minimum Wage Act.
Criteria for Exemption
The committee proposed that exemptions should be based on revenue or net income, rather than the capacity to employ. Enforcement mechanisms will need to access employer accounts to ensure compliance. They also recommended introducing hourly, daily, and weekly minimum wage rates for establishments that pay non-monthly wages.
Furthermore, the committee suggested flexibility in exemptions, allowing businesses to apply for them. This would support startups and entrepreneurs by factoring in the years of business operation.
Businesses Qualifying for Exemption
Businesses that may qualify for exemption include:
- Nano businesses (managed by 1-3 persons with capital below ₦50,000)
- Micro business enterprises with 10 or fewer employees
- Startups and businesses with legal or statutory exemptions
- Companies with quarterly revenues under ₦50 million or annual revenues under ₦200 million
- Organizations with less than 10 employees
- Establishments in operation for no more than three years
- Industries regulated by other Acts of the National Assembly
Other businesses deemed justifiably exempt by the Minister of Labour and Employment or the Executive Chairman of the National Salaries, Incomes, and Wages Commission, provided they can demonstrate lower revenue, insolvency, debt crises, or other existential threats. This waiver does not apply to government entities or their ministries, departments, and agencies.
Specific Exclusions
The committee also noted exemptions for seasonal workers in agriculture and those employed on vessels or aircraft regulated by maritime or civil aviation laws.
Challenges in Compliance
The committee highlighted significant challenges in ensuring compliance with the national minimum wage law, particularly within the formal sector, which includes governments, corporate organizations, and other structured private sector businesses. Despite the focus on these employers, there are often strategic avoidance of the threshold or outright non-compliance, particularly by state governments.
Informal Sector Considerations
In the informal sector, where wage patterns are less structured, compensation ranges from commissions to piece-rates. Workers may be paid daily based on sales or work under apprenticeship agreements with future settlement promises.
Justification for Exemption
The sub-committee argued that many organizations with small workforces but high revenues do not fairly compensate their junior staff above the minimum wage. They also noted that the International Labour Organization discourages such exemptions as unfair to low earners. They asserted that the previous threshold of 25 employees for exemption was both unfair and unrealistic.
