The prospect of a new and sustainable minimum wage appears unlikely as Nigeria struggles with the minimum wage issue. This can be deduced from a report by Data Services and Resources (ADSR), obtained by 9AM News Nigeria. The report stated that States like Oyo, Osun, Benue, Kogi, Yobe, Nassarawa, Adamawa, Ekiti, Kebbi, Plateau, Jigawa among a few others are the states with the least capability to pay a new minimum wage to its workers.
However the report ranked, Lagos, Imo and Zamfara as the states with the highest capability to pay a new minimum wage.
In the recent report titled “The Nigerian New Minimum Wage: Implications for State Governments’ Budget Performance”, the research institute ADSR based in Ibadan employed four metrics to arrive at the rankings.
9am news Nigeria reported that In computing the ability of States to finance a new minimum wage, ADSR took account of the ratio of personnel expenditure to total expenditure, total revenue, internal revenue and states’ total debt stock.
It stated that “This analysis shows that states with relatively high ability to pay are those currently having: low personnel expenses to total expenditure ratio; low personnel expenses to revenue ratio, especially, IGR; low debt profile, and relatively high elasticity of personnel costs contribution to future revenue and expenditure,”.
A minimum wage review became necessary in view of the current raging inflationary trends which has greatly depleted the disposable income of workers.
A new minimum wage when effective will inevitably increase the expenditures of States by a great measure due to the increased costs in servicing personnel salaries, benefits, pensions and overheads.
Though the calls for a new minimum wage continue to intensify, Ogasabi have observed that even the old minimum wage signed into law since 2019 is yet to be effective in all 36 states of the federation. A report by BudgIT, a civic-tech organisation, revealed that no fewer than 15 states were yet to implement the N30,000 minimum wage of 2019.
ADSR recommended some ways through which Nigerian states could fund a new minimum wage. One of the ways it mentioned was for states to create and implement an effective tax program. It also added that reducing corruption would enable states to finance a new minimum wage effectively.
“Corruption needs to be significantly minimised with wastes and leakages avoided for State to be able to find resources to finance higher minimum wage sustainably”. The report stated.
Nigeria’s organised labour, citing the expiration of the five-year Minimum Wage Act which saw the country’s lowest wage increase from N18,000 to N30,000 in 2019, demanded a N615,000 new minimum wage.
Negotiations between the labour unions and the government have been ongoing. As of June 7, 2024 labour unions have reduced their demand to N250,000.
A tripartite committee set up by the government to assess the state of things and propose a new minimum wage have proposed N62,000 to the government on June 10 2024.
In a 9am news nigeria correspondence report that currently, the president is consulting with states and the private sector before submitting a bill for a new minimum wage to the National Assembly.
