Some finance and economic experts have expressed worries that the N200,000 minimum wage demand for workers across the country could result in massive layoffs of civil servants.
The experts who spoke were of the opinion that the need to increase the current N30,000 minimum wage is long overdue.
The Trade Union Congress (TUC) demanded a review of the minimum wage from the current N30,000 to N200,000 to cushion the shock of the removal of fuel subsidy and the impending naira devaluation.
The National Minimum Wage Act 1981 exempts an establishment in which less than 50 workers are employed; an establishment in which workers are employed on a part-time basis (those working for less than 40 hours per week) from the national minimum wage.
In a recent interview, the Chief Executive Officer, of the Centre for the Promotion of Private Enterprise, (CPPE) Muda Yusuf, said TUC’s N200,000 minimum wage demand is not realistic considering government revenues.
Yusuf who was the immediate past Director General of the Lagos Chamber of Commerce and Industry (LCCI), admitted that the risk associated with a huge minimum wage increase will lead to unemployment and an unbearable standard of living amongst others.
He said since the increase will not be limited to the least-paid worker but across all levels, various key economic factors must be considered to arrive at a reasonable amount.
Yusuf said, “When the minimum wage is discussed, it’s not limited to the current N30,000 but an upward review in wages across all levels. The bill will be impossible if the baseline is N200,000. So, when the bargaining begins, they will come to real terms.
“Consideration of various actors will come into play, the number of employees, how much is earned monthly, and the country’s deficit, because all the savings will not be able to wipe out the current deficit in the budget.
“During the negotiation process, N80,000 is a realistic amount, because the current minimum wage is long overdue, but a realistic increase where employers of labour can pay monthly without delay is a more successful negotiation.
“Most private sector pay way above the minimum wage, In public service, some of the institutions may not be able to pay the supposed N80,000 minimum wage as there is no guarantee that all of them (private and public sector) will be able to pay.
“So, in a situation where they cannot pay, they will be forced to reduce their workforce, this is a possibility. And if it is a national minimum wage, workers in the private sector will have to comply, but also depending on the threshold. So, there is the risk of loss of job if the minimum wage is at a level that employers of labour cannot pay.”
Yusuf argued that people need to augment their income, and have flexible work days so that they could leverage the other days to generate income.
Also, a professor of economics at Olabisi Onabanjo University Sheriffdeen Tella, said that both the private and public sectors are underpaying staff in Nigeria, however, he doesn’t see the FG increasing the minimum wage to more than N50,000.
Tella said a N20,000 increase will amount to 66.7 per cent which would be calculated for other grade or pay levels.
Tella said, “I don’t think the FG will be ready to pay more than N50,000. The minimum wage increase will not be 20,000 by other levels, it will be graded on the percentage increase. With this, there may be a reason to lay off staff.
“However, the FG and state government may not lay off staff, if there will be an increase in productivity because they know that they are underpaying staff in both private and public organisations in Nigeria.
“And if the environment is conducive to productivity and labour and the economy is improving, then they will not lay off staff. But if productivity or the economy doesn’t increase, there are ways to implore the staff either to lay off workers or increase the working hours of workers.”
A multinational consulting firm, KPMG in its ‘Global Economy Outlook report, H1 2023,’ said unemployment will continue to be a challenge in Nigeria due to the continuing inflow of job seekers into the job market projecting the rate of unemployment in 2023 to be 40.6 per cent from the unofficial 37.7per cent recorded in 2022.
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