As Nigerian workers eagerly anticipate the implementation of the new N70,000 minimum wage, not all will benefit from this increase.
The Tripartite Committee on the New National Minimum Wage has recommended categories of workers who will not receive the new wage, following extensive investigations by Vanguard.
Exemption Criteria
The committee, which concluded its work on June 5, 2024, comprised various stakeholders, including the Minister of State for Labour and Employment, Onyejeocha Nkiruka, Governor Mohammed Bago of Niger State, labor leaders, private sector operators, and members of the National Salaries Incomes and Wages Commission.
The committee’s report recommended that only employers with a minimum of 10 employees should be mandated to pay the new minimum wage, a shift from the previous threshold of 25 employees as stipulated in the 2018 Minimum Wage Act.
Key Recommendations
The committee’s findings, based on consultations, surveys, and public hearings, aim to avoid unfairly excluding poor workers from earning a decent wage.
It proposed that exemptions should be based on an employer’s revenue or net income rather than their capacity to employ.
The report also suggested that enforcement mechanisms be developed to monitor employer compliance through access to their financial records.
The committee further recommended introducing hourly, daily, and weekly minimum wage options for businesses that do not follow the typical monthly payment structure.
This approach would accommodate part-time and piece-rate employees, ensuring fair compensation across various employment types.
Flexibility and Support for Startups
To encourage entrepreneurship, the committee suggested that new businesses could apply for temporary exemptions based on their years of operation.
This flexibility would help startups manage their financial challenges while still working towards compliance with the minimum wage laws.
Specific Exemption Criteria
Businesses that qualify for exemption must fall under specific categories:
Nano businesses (managed by 1-3 persons with capital below N50,000)
Microbusiness enterprises with 10 or fewer employees
Startups, legal or statutory exemptions, and commission-based contracts
Establishments with less than N50 million in quarterly revenue or N200 million annually
Organizations less than three years old
Industries regulated by other Acts of the National Assembly
Businesses facing insolvency, debt crises, or other significant financial threats
Sector-Specific Considerations
The committee also recognized the unique wage patterns in different sectors.
In the formal sector, wages are typically paid monthly, and compliance with minimum wage laws is often challenging due to strategic avoidance by some establishments or outright non-compliance by state governments.
In the informal sector, wages vary widely, with some workers paid daily, on commission, or through piece-rate agreements.
Apprenticeship arrangements further complicate wage structures in this sector.
Justification for Exemptions
The rationale for exemptions includes the observation that some organizations with small workforces generate significant revenue yet do not voluntarily pay their junior staff fair wages.
The International Labour Organisation (ILO) discourages such exemptions, deeming them unfair to the lowest earners.
The committee concluded that the previous baseline of 25 employees for exemption was unrealistic and recommended the new threshold to ensure a fairer application of the minimum wage laws.
