July 19, 2024/CSL Research
After a meeting between President Bola Tinubu and leaders of the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) at the State House in Abuja, the Minister of Information and National Orientation, Mohammed Idris, announced that the Government and the Labour centers have agreed on a new minimum wage of N70,000 for the least paid workers in the country. Previously, the Federal Government had offered N62,000, while Labour had demanded N250,000. Idris also mentioned that numerous incentives are being developed to accompany the new minimum wage.
Bayo Onanuga, the special adviser to the president further confirmed plans to review the national minimum wage law every three years and to find optimal ways to assist the private sector and the sub-nationals pay the minimum wage.
Nigeria’s inflation rose to another new high of 34.19% in June 2024, making it one of the highest in the world. The removal of the subsidy on petrol and the unification of the FX rates at the various official windows worsened inflationary pressures in 2023, into 2024.
Given the failing macroeconomic conditions in the country, more Nigerians were pushed below the poverty line in 2023. According to the World Bank, sluggish growth and rising inflation has caused an estimated poverty rate to reach 38.9% as of 2023, with an estimated 87million Nigerians living below the poverty line — the world’s second-largest poor population after India.
The implementation of the minimum wage is long overdue, and the expected increase is insignificant compared to the rise in living cost. Therefore, it is crucial for both State and Federal Governments to develop clear and workable strategies to boost revenue to meet the associated increases in personnel costs. At the federal level, government revenue is strained by elevated debt servicing costs amidst weak revenue-generating capacity.
At the state level, the heavy reliance on FAAC allocations, which are closely tied to the volatile prices of crude oil, combined with weak internally generated revenues, means many state governments struggle to pay salaries when FAAC allocations decrease or simply cannot cover the running expenses of such states. Notably, the existing minimum wage law of 2019, which raised the minimum wage to N30,000, had not been fully implemented in about seven states as of 2022.
It is imperative for state governments to develop clear strategies to generate revenue to accommodate the associated increase in personnel costs, ensuring that salary increases are not merely theoretical but can be practically implemented.
