As Nigeria anticipates President Bola Tinubu’s executive bill on a new minimum wage to the National Assembly, concerns are mounting that many states may require bailouts or may need to retrench workers to afford the proposed N62,000 minimum wage by the Federal Government and Organised Private Sector (OPS).
Financial Strain on States
Despite increased allocations following the removal of the fuel subsidy in May 2023, insiders have revealed to Vanguard that the increments are insufficient to sustain the payment of N62,000 minimum wage.
The OPS clarified that there was no agreement in the recently concluded meeting of the Tripartite Committee on the New National Minimum Wage, but rather an alignment of interest.
Governor Nasir Idris of Kebbi State has distanced himself from other governors who hinted at their inability to pay the proposed wage.
Meanwhile, Senator Ahmed Wadada (SDP, Nasarawa West) has urged President Tinubu to consider a minimum wage of at least N150,000.
Allocations and Shortfalls
Currently, over 20 states have not implemented any wage awards to mitigate the impact of the fuel subsidy removal, despite President Tinubu’s plea for states to emulate the federal government’s N35,000 additional payment to the N30,000 minimum wage.
A breakdown of federal allocations to states shows that from January to June 2023, before the subsidy removal, the 36 states received N2.188 trillion.
From July to December 2023, after the subsidy removal, they received N2.305 trillion – an increase of just N116.79 billion (5%).
While Lagos State saw a 28% increase in allocation, states like Akwa Ibom, Delta, Bayelsa, and Rivers experienced reductions, attributed to fluctuations in the 13% derivation fund.
Governors’ Concerns
An anonymous governor highlighted the broader implications of the minimum wage hike, emphasizing the financial strain on states and local governments.
“The issue is not about the Federal Government, which Labour makes it look like. What is being negotiated is a national minimum wage, not a federal government minimum wage for its workers,” he said.
He argued that many states would struggle to afford the proposed wage, potentially leading to borrowing or neglecting other essential services like education, healthcare, and infrastructure.
Kebbi Governor’s Stance
Governor Idris, in an interview with the BBC, reaffirmed his commitment to paying the agreed minimum wage, distancing himself from governors who oppose the increase.
He pledged to continue advocating for Nigerian workers’ welfare as a member of the tripartite committee.
“I was not part of the meeting if it was even held, and I will not be part of those who will not pay the agreed minimum wage,” Idris stated.
He urged both the federal government and organised labour to find a sustainable and acceptable compromise.
OPS Perspective
The OPS, through its spokesman and Director-General of the Nigeria Employers’ Consultative Association (NECA), Wale-Smatt Oyerinde, clarified that the outcome of the tripartite committee meeting was a recommendation, not an agreement.
He stressed the need for a realistic minimum wage that employers can afford, proposing that the new wage should apply only to employers with 200 employees and above, to protect SMEs.
Senator Wadada’s Proposal
Senator Wadada has called for a minimum wage of N150,000, citing the harsh economic realities facing Nigerian workers.
He expressed willingness among lawmakers to make personal sacrifices to ensure fair wages for workers.
“For me, the minimum a worker should earn is N150,000, looking at the realities of today,” he said.
Wadada praised President Tinubu’s administration for its openness and responsiveness, expressing confidence that a fair and acceptable minimum wage figure would be agreed upon.
As the debate over the new minimum wage continues, the focus remains on balancing the financial capabilities of states and the need to provide a living wage for workers.
The impending bill in the National Assembly will be a crucial step in addressing these complex issues.
