A minimum wage of N66,000 is the expected real minimum wage by May 2024, Dataphyte’s latest analysis informs.
The analysis also estimates a real living wage of N106,000 per individual in case the President intends to keep his promise to provide a living wage for Nigerians.
An increase in minimum wage could lead to the redistribution of wealth, induce higher productivity, and make the poor less poor.
It could also lead to demand-pull inflation and further strain the government revenue, especially that of low-income states.
To forestall another protracted strike by labour and its attendant loss of lives and livelihoods, Dataphyte, as part of its core civic education and information literacy functions, takes another proactive step to moderate the stalemate between the private and public sector employees and their employers.
Dataphyte has monitored the minimum wage conversation since 2 days before President Tinubu’s inauguration as the President of the Federal Republic of Nigeria.
The President-elect promised in his speech then that he would provide all Nigerian workers a living wage and not just a minimum wage.
Dataphyte advised then that the President-elect may not achieve his promise unless the minimum wage law was reviewed to include all Nigerian workers. The piece also suggested global practices that prevent workers from being enslaved with unregulated and unadjusted wages.
We clarified then that 84% of Nigerian workers work in Micro-Enterprises, and that the Minimum Wage Act exempts these firms from paying the minimum wage. We also indicated that adjusting wages in 5-year intervals would rob workers of their real wages lost to year-on-year inflation.
Again, as soon as Nigeria’s organised labour, through the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC), proposed a new minimum wage of N615,000, Dataphyte advised the public on why that demand was not feasible.
We indicated a globally estimated living income range of N118,547 to N464,100, with a midpoint of N291,380. Upon this explainer on a living wage ceiling of N464,100, the organised labour shifted ground from 615,000 to N494,000 and the government moved from N30,000 to N60,000.
After the NLC and TUC’s strike was suspended last Tuesday, organised labour shifted again to N250,000, closer to Dataphyte’s Midpoint Living wage estimate of N291,380. However, the government only moved the needle by N2,000, with a proposal of N62,000 minimum wage.
Unfortunately, State Governments have distanced themselves from the Federal Government’s proposal, insisting they can’t pay beyond N60,000.
The third main party in the negotiations, the organised private sector (employers) have also said they cannot afford the wage bill of N250,000 that organised labour (employees) demands.
Employees hinge their demand for a wage review on the need to cushion the adverse effect of inflation on their nominal income. This is separate from the demand for a pay rise because of an employees’ increased productivity or promotion.
However, if organised labour’s main concern is the inflationary pressure on their incomes, this analysis helps in arriving at a minimum wage rate that cancels out the inflation rate on workers’ salaries, especially the current minimum wage of N30,000.
This analysis also estimates a real living wage based on the 2018 living wage of N43,200 to be an equivalent of N106,000 by May 2024.
Poorer Employees
Within the current 5-year minimum wage regime, the real value of the N30,000 minimum wage has depreciated to N11,708.
The static minimum wage of N30,000 calculated against the year-on-year inflation from 2019 to April 2024 shows that the real minimum wage declined yearly.
The real minimum wage decreases yearly by a margin of over N3000. The highest decline was between 2020 and 2021, which coincided with the Covid-19 pandemic, while the lowest reduction was between 2019 and 2020.
The significant inflation over the past year has substantially eroded the purchasing power of the N30,000 ($20) minimum wage.
The Plight of Workers
The newly proposed minimum wage by the NLC, if implemented, may only reach 1.2% of Nigeria’s working population, specifically among the 12.7% in salaried employment.
This is unfortunate because 99% of Nigerian workers may never gain from ‘organised’ labour’s struggle to get an upward wage review. Instead, 99% of workers may have to share in the marginal inflationary pressure that the increase in the salaries of 1% of workers may add to the current cost-push inflation.