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Finding Balance between a Living Wage and a National Minimum Wage

A country’s national minimum wage is the lowest wage an employer is required by law to pay any employee. The minimum wage ensures a baseline standard of living for all employees, protecting them from exploitation and severe poverty. Consequently, it has far-reaching implications for daily life, as it affects the purchasing power of workers, the cost of goods and services, and overall economic stability. The national minimum wage directly influences household income, living standards, and the ability of families to afford necessities such as food, healthcare, and education.

The negotiation on the tripartite committee on national minimum wage in Nigeria has once more reached a deadlock. Organized labour is insistent on a minimum wage of N494,000. On the other hand, the government and the organized private sector have agreed on a figure of N60,000. The end to this deadlock may not be near, given the wide disparity between the proposals. The government-organized private sector’s proposed increase is 100%, while the organized labour’s demand represents a 1647% increase from the current minimum wage of N30,000.

Organized labour has consistently emphasized that it is seeking a living wage, not just a minimum wage, the government and the organized private sector may appear to focus solely on a basic minimum. In addition to the inflation challenges the country is facing, Nigerian workers have been significantly underpaid. The organized labour seeking to address this is requesting a substantial increase in the minimum wage, which at first glance, may seem excessive.

With the inflation rate in Nigeria standing at 33.69% as of April 2024, the proposed 100% increase in the minimum wage by the government and the organized private sector might seem like a good idea. However, in real terms, the removal of subsidies has caused the price of petrol to rise from N197 to about N680 in a place like Abuja, representing a 345% increase. It is more expensive in some other parts of the country. This increase has led people to spend as much as N200,000 to fuel a car monthly. Those who have opted for public transport have seen prices increase by 150-200%. Additionally, the floating of the naira has led to its devaluation. Prices of goods and services have risen indiscriminately, leading many to believe that the real inflation rate is much higher than the quoted 33.69%.

More compromise needs to be made by all parties involved. The government has stated that it cannot afford and sustain the proposal of N494,000 and that it is also concerned about its potential impact on the entire economy, including the possibility of job losses in the private sector. It is important to note that some state and local governments have struggled to pay the existing national minimum wage of N30,000. The organized private sector also highlighted concerns regarding the ability to pay amidst the current economic conditions in the country. With federal government workers comprising only about 1.2 million people out of Nigeria’s population of over 200 million, organized labour must consider a broader perspective to avoid the perception that they are advocating solely for federal workers.

The government and organized private sector need to look beyond percentage increases. A 100% increase in a grossly inadequate minimum wage is not as beneficial as it might seem. It is imperative to prioritize employee welfare. Similarly, organized labour must understand that while their demand may seem justifiable, the affordability and sustainability of implementing such an increase are essential. Also, such a hike could further exacerbate the nation’s inflation woes. There is no point in agreeing on a national minimum wage that will be frustrated by the inability to pay and that can potentially lead to massive job losses.

The article was originally published on Politics Nigeria.

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