As Nigeria anticipates the introduction of President Bola Tinubu‘s executive bill for a new minimum wage to the National Assembly, several state governments face financial hurdles in implementing the proposed ₦62,000 minimum wage agreed upon by the Federal Government and the Organised Private Sector (OPS).
Despite receiving increased allocations following the removal of the fuel subsidy in May 2023, many states report that these funds are insufficient to sustain the higher wage demands.
The Organised Private Sector, while commenting on the outcomes of the recent Tripartite Committee meeting on the new national minimum wage, stated that there was no formal agreement but rather an alignment of interest” regarding the wage increase.
This clarification comes amidst discussions on the feasibility of the proposed wage adjustments.
Amid these financial challenges, Kebbi State Governor Nasir Idris has publicly distanced himself from other governors who have expressed concerns over their ability to meet the new wage requirements.
Conversely, Senator Ahmed Wadada of Nasarawa West has called on President Tinubu to set an even higher minimum wage of ₦150,000, highlighting the need for significant adjustments to address economic hardships, particularly those worsened by the recent fuel subsidy removal.
Currently, at least 20 states are not implementing any wage awards to alleviate the hardships faced by workers due to the subsidy removal, despite appeals from President Tinubu to mirror the federal government’s approach of paying an additional ₦35,000 on top of the existing ₦30,000 minimum wage.
The reluctance of these states is primarily attributed to a lack of funds, with many governors reportedly dragging their feet on new wage negotiations in which they were minimally involved.
Arguing that most states would have issues paying ₦62,000 as minimum wage, a governor who spoke with Vanguard said: “The issue is not about the Federal Government, which Labour makes it look. What is being negotiated is a national minimum wage, not a federal government minimum wage for its workers.
A national minimum wage affects states, local governments and private sector employers, especially SMEs and MSMEs. The first consideration in wage negotiation is affordability and ability to pay. Can states, local governments and private-sector employers afford to pay?
It means states and local governments will spend all their federal allocation and internally generated revenue and even borrow to pay their workers who are less than one per cent of their population. What will they spend on the rest of the citizens in the 36 states who need education, good roads, healthcare, security etc?
There is a need to consider the consequences on the economy, inflationary trend and possible layoff of workers if NLC/TUC blackmailed the government to agree on a minimum wage that is not realistic and sustainable.
There is a general consensus that minimum wage should be increased but it has to be within a realistic band of what all parties can pay. That is why the private sector and government are offering ₦60,000.”
