To determine whether the new minimum wage would be sustainable or not, we must look at the real value of the N30, 000. The minimum wage was increased from N18, 000 representing a nominal increase of about 66.7 percent. But the real question is, what is the purchasing power of N30, 000 today? If we calculate the real minimum wage today adjusting for inflation in March 2017 and March 2019, you’ll discover that N30, 000 today is only worth N23, 792 in 2017 prices. This informs us that real income has not raised enough to cater for inflationary pressures. So, as it stands, the minimum wage is not sustainable.
Well, the increment is just going to cause money illusion among people because surely there will be hike in prices of goods and services. Now, the Federal government is making the payment mandatory to the state governments whereas most of the state governors are saying they can’t pay it while some are saying if at all they will pay, there will be increase in taxes in such States which makes no sense at all. So, I believe the sustainability of the new minimum wage is very slim due to the above reasons I have mentioned but let’s see what happens in the next few months when we now have new government in most of the States, whether it will be effective at first before we even talk about its sustainability.
Talking about the implementation, its lies in the hand of the State government because some State government are still battling with the payment of N18, 000 claiming that the allocation given to them is not enough and they do not have any supporting revenue to back the State up. Except if the Federal Government increases each state’s allocation, and grant also given to those States that are having challenges that is when I will say the implementation will take effect. There might be little change in the State salaries which might not be N30,000 and it might not be immediate but gradually.
Time will tell if the wage is going to be sustainable or not because the new minimum wage bill has only just been signed into law; we await the implementation across the various States. Having said that, implementing the new minimum wage is a good omen for the country as it will help improve consumers’ purchasing power. This in turn will suppose increased aggregate demand and strong economic growth at large. Nonetheless, the downside risk factors include the inability of many States to be able to fund the increased wage bill without incurring more debt or laying off workers. Also, the implementation of the minimum wage will mildly elevate inflationary pressure in the near term. Overall, it’s a good development, provided it is not being accompanied by spike in electricity tariff and petroleum price.
The new minimum wage is not really a stepping stone for growth. This is because a lot of other pressing factors contribute to the growth of a country, and not necessarily minimum wage of a negligible percentage of the country’s population. Even amongst these same beneficiaries of the minimum wage, there isn’t even a respite in place to indicate that something beneficial has birthed for them through this act. This is due to the fact that the ripple effect of such small increment in wages for workers is often on the adverse side. In a short while, the prices of other items are going to increase, such as house rent, transportation, children’s school fees, etc, couple with the anticipated upward review of taxes/levies on such wages by government. Until the government puts in place a lot of variables to ensure that there is an appreciable hike in the purchasing power of the minimum wage recipients, in the foreseeable future, we might just see the lamentation of workers in no distant time.
I am not too sure about the sustainability because Nigeria is rich, unfortunately, we don’t have true leaders, all we have are parasites. Should we be talking of US$83.39 as a minimum wage when the so called leaders are taking excessively much more than should be given to them, not to talk of the projects’ funds and Ghana must go bags they share oftentimes? Now see what is given to lawmakers per year, Nigerian senators will earn $55,000 a year in salary, while house of representatives members will earn $42,000—but that’s not the main issue. For lawmakers, the big bucks come in form of the generous allowances. Put together, each lawmaker will cost taxpayers $540,000 to maintain in 2017 alone. Isn’t it a big shame for us to be talking of sustaining the crumbs called minimum wage in Nigeria. I see this as celebration of hypocrisy.
There are many issues involved for this to be sustained. Firstly, in a federal system, it is absurd to legislate the same minimum wage for States like Lagos, Rivers, Delta and Akwa Ibom vis-à-vis States like Zamfara, Gombe, Adamawa, Borno, Sokoto and Kebbi. The economic and social status of these States varies. Besides, it negates the principle of fiscal federalism. Secondly, sustainability of implementation is variable dependent on affordability, curbing of wastages, economic and financial discipline, refining corruption, and prioritisation of operations/activities. Thirdly and lastly, an enabling environment must be created for the private sector to thrive and to stimulate economic growth.
How can the new minimum wage be sustained in a sick economy? Granted, the new minimum wage may add up the pockets of workers, but it would be valueless on the streets of the present economy. This is because of the short supply of money to the ‘circulatory system’ of the economy. Nigerians would continue to suffer sustained economic hardship so long as we have an incompetent and clueless government in place. According to my finding from what I read in a report, it summed it all when it stated that allowing the present administration to continue in 2019 raises the risk of limited economic progress and further fiscal deterioration and the reason is that because money is continually withdrawn and not generated back into the system, not only is the money pulled from the system, but also it shocks the system, slows it down, and forces it to work harder in order to compensate. Of course, that is why we are suffering from prolonged economic stress. So, for the new minimum wage to be sustainable, organized labour should impress on the Federal Government to build a viable economy. And to achieve this, we need a President who’ll not only provide visionary leadership, but also has an entrepreneurial mindset.
It will amount to gross misconception for anyone to say that the implementation of the minimum wage will cause more harm than good to Nigeria economic growth or progress of the country. Nigeria is blessed with all it takes to finance this minimum wage and also ensure that they keep to it till infinity. For me, I see this implementation as a way of giving the country good image because this will go a long way in aiding the citizens to meet up with their standard of living in one way or the other. I sincerely applaud the President for ensuring that this implementation is a thing of reality. This will also encourage civil servants to put in their best in their respective area of work.
It’s painful that the so called giant of Africa is implanting a minimum wage of mere N30, 000. For a country that has a population of close to 200 million people and recently ranked the world’s capital of poverty, it’s a big shame on the part of our leaders. The newly implemented minimum wage is nothing short of a shame and a colossal embarrassment. Looking at other African countries such as Rwanda and South Africa that sometime last year increased its minimum wage to about N200, 000 if converted to naira, shows that Nigeria needs a total revamp and proper restructuring. For me, it is not the case of if been sustained; the amount increased to is not encouraging at all.
Comparing the value of the naira against the dollar before and now, you would see how pathetic the situation is. On the growth of the country, I don’t know about that; but I think the false financial security it would give the workers would help them gain more peace of mind from the home-front (their families), that is, if the buying power of their wage doesn’t continue diminishing. I would say it is not sustainable.