Close Menu
    Facebook X (Twitter) Instagram
    Trending
    • Benue Assembly Crisis: Speaker Resigns Days After Suspending Four Lawmakers
    • Ex-Kebbi PDP Governorship Candidate, Isa Galaudu Dumps Party
    • After Nigeria, Kemi Badenoch Turns Blame To UK, Says, ‘I’m Under Attack Over My Race, Ethincity’
    • Wanted Chinese Gang Leader Arrested In Nigeria, Deported To China By INTERPOL
    • Fake Pregnancy, Real Cocaine: Widow In NDLEA Net After Attempt To Supply Abuja Clients
    • Court Documents Reveal How Truck Driver, Foreign Nationals Defraud Dangote Of Billions
    • Coalition Wobbles: ADC Faces Uncertainty Without Atiku, Obi’s Commitment
    • Nigeria: Why Brazil. Yes, Brazil – By Sunday Dare
    Facebook X (Twitter) Instagram
    NEWS POINT NIGERIANEWS POINT NIGERIA
    UBA 720X90
    • HOME
    • NEWS

      Benue Assembly Crisis: Speaker Resigns Days After Suspending Four Lawmakers

      August 24, 2025

      Ex-Kebbi PDP Governorship Candidate, Isa Galaudu Dumps Party

      August 24, 2025

      After Nigeria, Kemi Badenoch Turns Blame To UK, Says, ‘I’m Under Attack Over My Race, Ethincity’

      August 24, 2025

      Wanted Chinese Gang Leader Arrested In Nigeria, Deported To China By INTERPOL

      August 24, 2025

      Fake Pregnancy, Real Cocaine: Widow In NDLEA Net After Attempt To Supply Abuja Clients

      August 24, 2025
    • COLUMN

      Nigeria Is Full Of Single Girls – By Funke Egbemode

      August 24, 2025

      Bye Elections And The Reality Check – By Jonathan Nda-Isaiah

      August 23, 2025

      Putin As The President’s Medicine – By Azu Ishiekwene

      August 22, 2025

      AI As The New Indolence, That Netanyahu Call, Salah’s Tweet And Our Kwam Mentality (1) – By Dr Hassan Gimba

      August 18, 2025

      From KWAM 1 To KWAM 2: How Not To Run A Nation – By Kazeem Akintunde

      August 18, 2025
    • EDUCATION

      FG Names Prof. Adamu Acting Vice-Chancellor To Steer UniAbuja For Three Months

      August 9, 2025

      13 Countries Offering Free Or Low-Cost PhD Programmes For Non-Citizens

      January 25, 2025

      NECO: Abia, Imo Top Performing States In Two Years, Katsina, Zamfara Come Last

      October 3, 2024

      NBTE Accredits 17 Programmes At Federal Polytechnic Kabo

      August 20, 2024

      15 Most Expensive Universities In Nigeria

      May 19, 2024
    • INTERNATIONAL

      Israeli Attacks Kill 63 As Troops Push Deeper Into Gaza City

      August 24, 2025

      Russia Claims More Ukraine Land As Hopes For Peace Agreement Fade

      August 24, 2025

      Dutch Prime Minister, Cabinet Members Resign Over EU’s Refusal To Sanction Israel On Gaza Genocide

      August 23, 2025

      Tension As North Korea Accuses South Korean Troops Of Firing Warning Shots Near Border

      August 23, 2025

      Israeli’s Netanyahu Approves Gaza City Seizure Despite Ceasefire Talks

      August 22, 2025
    • JUDICIARY

      FULL LIST: Judicial Council Recommends Appointment Of 11 Supreme Court Justices

      December 6, 2023

      Supreme Court: Judicial Council Screens 22 Nominees, Candidates Face DSS, Others

      November 29, 2023

      FULL LIST: Judicial Commission Nominates 22 Justices For Elevation To Supreme Court

      November 16, 2023

      Seven Key Issues Resolved By Seven Supreme Court Judges

      October 26, 2023

      FULL LIST: CJN To Swear In Falana’s Wife, 57 Others As SANs November 27

      October 12, 2023
    • POLITICS

      What Peter Obi May Lose If He Joins Coalition As VP Candidate

      May 25, 2025

      Atiku Moves To Unseat Wike’s Damagum As PDP Chairman, Backs Suswam As Replacement

      April 15, 2024

      Edo’s Senator Matthew Uroghide, Others Defect To APC

      April 13, 2024

      Finally, Wike Opens Up On Rift With Peter Odili

      April 2, 2024

      El-Rufa’i’s Debt Burden: APC Suspends Women Leader For Criticising Kaduna Gov

      March 31, 2024
    • SPORTS

      Super Eagles Striker, Victor Boniface’s AC Milan Transfer Stalls Over Fresh Knee Injury Concerns

      August 24, 2025

      Tottenham Emerge Favourites As Five English Clubs Chase Nigeria’s Forward, Ademola Lookman

      August 24, 2025

      Osimhen, Ndidi, Iwobi Return As Coach Chelle Names Squad For Crucial World Cup Qualifiers

      August 23, 2025

      Taribo West Slams NFF, Lagos FA For Abandoning Late Goalkeeper Peter Rufai’s Family

      August 23, 2025

      Former Super Eagles Forward, Brown Ideye Retires From Football At 36

      August 22, 2025
    • MORE
      • AFRICA
      • ANALYSIS
      • BUSINESS
      • ENTERTAINMENT
      • FEATURED
      • LENS SPEAK
      • INFO – TECH
      • INTERVIEW
      • NIGERIA DECIDES
      • OPINION
      • Personality Profile
      • Picture of the month
      • Science
      • Special Project
      • Videos
      • Weekend Sports
    NEWS POINT NIGERIANEWS POINT NIGERIA
    UBA 720X90
    Home - The Minimum Wage Issue: Numbers Vs Values – By Dr Dakuku Peterside

    The Minimum Wage Issue: Numbers Vs Values – By Dr Dakuku Peterside

    By Dakuku PetersideMay 6, 2024
    Dakuku 3
    Dakuku

    THE issue of minimum wage or salary increase or by whatever nomenclature is a complicated policy issue. The wage increase is neither good nor bad, but as a policy choice, it must be tied to some ultimate objective and benchmarked on the projected cost of living and inflationary trends over a given period. A pay rise can improve employees’ motivation while giving them more purchasing power and disposable income. It may result in businesses being shut down, hyperinflation, joblessness, and a decline in the value of the national currency. At face value, salary increases are a tool to address inequality, poverty, and welfare or an incentive to check corruption. However, the issue is more profound than this surface-level discourse.

    Recently, the federal government announced a new salary raise for mainstream federal workers. This is not the new minimum wage; at least, that is what we are told. Some state governments followed suit with discordant tunes. The truth is that for the average Nigerian worker, with headline inflation at 33.2% by March 2024 and food inflation at 40.1%, the current wage is insufficient and cannot sustain any worker. This underscores the need for the government and all labour employers in Nigeria to review salaries. However, the government’s current economic realities and financial position make it challenging to create a salary increase that is not backed by increased value and productivity. While it may seem complicated, this measured approach is necessary to avoid harsh negative implications on the economy and the unintended backlash on people with low incomes and many on the fringes of our society.

    Expectedly a policy to help people experiencing poverty and create some semblance of equity within our socio-economic ecosystem, salary increases for government workers, albeit less than 25% of the workforce, will have ramifications. Given these difficulties evident in the new policy, the government and labour leadership must play a balancing act to midwife a new salary structure that is fit for purpose yet germane to the multifaceted nuances of our current economic reality.

    TAZKIYAH UNIVERSITY

    The wage increase will result in both negative and positive economic impacts. On the negative side, inflation will worsen, small and medium-scale businesses (SMEs) barely managing to survive will be hugely impacted, and the cost of doing business will skyrocket. How many SMEs can afford this increase? Most of the companies are struggling with paying the existing minimum wage, given the rise in the cost of doing business, interest in loans is over 40%, the cost of raw materials is over the roof, consumers with little income are squeezed to a pulp by the constant increase in prices. Besides, how many state governments can afford it? Most Nigerian states have failed to optimize their potential and go cap in hand every month to FAAC. Across a sizeable economic terrain like Nigeria, a uniform nationwide minimum wage may be foolhardy. Costs of living are divergent across the country. States should negotiate with labour unions for acceptable minimum wage structures in different states and geopolitical zones. There may be an urgent need to de-link the minimum wage issue from national politics.

    On the positive side, wages should increase in tandem with the cost of living. It will keep workers motivated and may even help the economy rebound. A living wage is not only desirable but expedient. What Nigerian workers earn today is a “symbolic wage” and has no practical bearing on reality. The federal minimum wage, currently at N30,000, was last raised in 2019 when the inflation rate was 11-12%. The purchasing power of the naira has since been eroded by 276% (compared to the 2019 rate). Nigeria is ranked 44th in Africa for minimum wage, according to Prof. Kemi Okuwa of the Nigerian Institute of Social and Economic Research. These factors indicate the need for a wage increase to address the growing disparity between wages and the cost of living.

    UBA

    When implementing wage increases, the government must exercise caution to ensure that its devotion to its responsibility does not have the reverse impact. The government must develop a robust economic plan to reduce cost of living as well mitigate the ripple effects on low-income workers, SMEs, and the macroeconomy. We remember the infamous Udorji’s Commission saga and its economic impact. Many economic historians have pointed to the significant shake-up of the salary structure by the Udorji Commission as one of the major problems of Nigeria’s economy in the 1970s that upended our pricing system and created significant price inflation in the economy. We must learn from history! A situation where the monetary reward for work is increased but not based on productivity will often lead to unwarranted inflation.

    Productivity and added value creation should be a significant consideration among many bases for ascribing monetary wage increases, not just policy or legislation. Can the government link the increase in public servants’ wages and salaries to measurable productivity? Any increase in the cost of production and labour at this point, with no corresponding increase in added value to production, is not sustainable and often is an aberration to the system. Therefore, a balanced approach that considers both the need for increased wages and the economic reality of our country is crucial. This will ensure that our wage policy is fair and sustainable in the long run.

    Happy Birthday

    The problem with government-induced increase is that only a limited number of workers, civil servants at the federal level, will get the money; many states may claim they need the means to pay that. Even if the state civil services pay that, combined with the federal civil service, they make up less than 25% of the employed workforce in Nigeria. Most of our workforce comprises low-wage workers, whom SMEs and Organized Private Sector firms employ. These small businesses are struggling to pay the N30,000 per month minimum wage, much more than the new minimum wage. This minimum wage will make these workers poorer if they do not get it like the civil servants because they all buy from the same market.

    Besides, making unenforceable laws does not make sense. In other climes, it is against the law not to pay the minimum wage. It is enforced with explicit punishment for breaking the law. In Nigeria, this is different. Nothing happens even if any tier of government fails to pay the minimum wage. Most businesses will completely ignore the new salary structure, and there will be no legal consequences. The government must put some teeth to the new minimum wage rule for equity and justice and at least make it stick across the board. It must also consult widely and make the minimum wage more realistic.

    Nigerian TAX Reform - Federal Goverment

    I understand the need for an increase in salary because of hyperinflation that has eroded purchasing power. However, I am preaching caution and a measured approach to dealing with this issue by considering all the ramifications and putting measures in place to cushion unintended consequences. Our recent experience has shown that a salary increase may start a merry-go-round of cyclical inflation that begins with a salary increase, and then inflation eats up the value, and then we are back to where we started. In an economy with over 40% food inflation, all stakeholders must apply caution and careful measures in implementing a new salary structure. However, governments (federal, state, and local) cannot afford to play politics with the issue of “living wage”.

    The implications of creating new salary structures and increasing the minimum wage are complex and multifaceted, requiring careful consideration of various factors, including economic conditions, industry dynamics, and social equity goals. Although I advocate for workers getting a living wage and meaningful salaries, given our current economic realities, a more measured approach based on value addition, productivity, and accountability will suffice. As the new wages are implemented, a corresponding demand for increased productivity must be implemented by all stakeholders to make the system sustainable.

    I understand the need for government intervention in this, especially the political benefits to the government in terms of reasonable public opinion and support, good labour relations and collective bargaining dynamics, and the corresponding public and political debates and legislative actions this generates; however, the economic exigencies – potential job losses, negative impact on SMEs, and inflationary pressures – must be paramount and considered. A living wage is the right of every Nigerian, and we must fight for that to reduce income inequality gaps and fight multidimensional poverty. High productivity and less economic legislation are the way forward, and the current confusion in the debate over a minimum wage needs to be more holistic and better informed. All the variables must be on the table, devoid of political grandstanding.

    National Orientation Agency Page UP
    National Orientation Agency - Down

    Dr Peterside is a chieftain of the All Progressives Congress (APC) and former Director-General of Nigeria Maritime Administration and Safety Agency (NIMASA). His syndicated column appears on News Point Nigeria newspaper on Mondays.

    Dakuku Peterside Column Minimum Wage
    Share. Facebook Twitter WhatsApp LinkedIn Telegram Email

    Related Posts

    Nigeria Is Full Of Single Girls – By Funke Egbemode

    August 24, 2025

    Bye Elections And The Reality Check – By Jonathan Nda-Isaiah

    August 23, 2025

    Putin As The President’s Medicine – By Azu Ishiekwene

    August 22, 2025

    AI As The New Indolence, That Netanyahu Call, Salah’s Tweet And Our Kwam Mentality (1) – By Dr Hassan Gimba

    August 18, 2025
    Add A Comment
    Leave A Reply Cancel Reply

    Latest Posts

    Benue Assembly Crisis: Speaker Resigns Days After Suspending Four Lawmakers

    August 24, 2025

    Ex-Kebbi PDP Governorship Candidate, Isa Galaudu Dumps Party

    August 24, 2025

    After Nigeria, Kemi Badenoch Turns Blame To UK, Says, ‘I’m Under Attack Over My Race, Ethincity’

    August 24, 2025

    Wanted Chinese Gang Leader Arrested In Nigeria, Deported To China By INTERPOL

    August 24, 2025

    Fake Pregnancy, Real Cocaine: Widow In NDLEA Net After Attempt To Supply Abuja Clients

    August 24, 2025
    Advertisement
    WIDGET ADS
    News Point NG
    © 2025 NEWS POINT NIGERIA Developed by ENGRMKS & CO.
    • Home
    • About us
    • Disclaimer
    • Our Advert Rates
    • Privacy Policy
    • Terms of Use

    Type above and press Enter to search. Press Esc to cancel.

    Join Us On WhatsApp