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Minimum wage controversy: FG targets N65,000 as governors settle for N57,000

The federal government might disagree with governors and the private sector regarding a new minimum wage proposal.

The federal government is considering a minimum wage of N65,000, but governors and the private sector are not in favor of exceeding N60,000, citing sustainability concerns. They argue that paying more than N57,000 would limit funds available for development, as a significant portion would go towards wages.

Negotiations continue between organised labour, which includes the Nigeria Labour Congress )NLC) and the Trade Union Congress (TUC), and the government. Labour has rejected the government’s offer of N60,000 and reduced its demand from N497,000 to N494,000.

The government and private sector suggested N60,000 as the minimum wage, up from the N57,000 proposed earlier. Initial proposals of N48,000 and N54,000 were also declined by Labour.

Labour unions have stated that the existing minimum wage of N30,000 is insufficient for workers’ well-being, noting that not all governors are adhering to the current wage, which expired in April 2024.

Joe Ajaero, the president of the NLC, commented on the government’s proposals, emphasising the need for a living wage. He highlighted the disparity between the economies of the wealthy and workers, calling for a unified approach.

A nationwide strike was initiated last week due to unmet demands, disrupting economic activities across the country. The strike aimed to address the government’s delay in approving a new minimum wage and reversing electricity tariff increases.

After discussions with labour leaders, the government persuaded the protesting workers to call off the strike, showing a willingness to set a minimum wage above N60,000. An agreement was reached to continue negotiations and ensure no worker would be penalised for participating in the strike.

However, governors have criticised the federal government for yielding to labour’s demands without considering the states’ ability to pay more than N60,000.

The private sector also expressed dissatisfaction with the government’s decision-making process. Despite opposition to N60,000, a government negotiation team member stated the government’s readiness to fulfill its promise of a higher wage.

Financial documents from the Nigeria Governor’s Forum reveal the challenging fiscal status of states, indicating difficulties in meeting wage demands above N57,000. The documents compare state allocations during subsidy and non-subsidy periods, showing variations in revenue.

A report issued by the Nigeria Governor’s Forum secretariat, entitled ‘Comparative Analysis of States Gross Allocation Between Subsidy and Non-Subsidy Regimes (January – December 2023)’, revealed the total revenues that states accrued from the Federation Account.

The report included a table detailing the States Gross Allocations, which encompassed funds from Statutory Allocation, Value Added Tax, Electronic Money Transfer Levy, Exchange Gain, and Augmentations during both the subsidy and non-subsidy periods of 2023.

It was observed that a majority of the states saw an increase in their allocations during the latter half of the year, following the cessation of the subsidy regime.

The NGF attributes this to a rise in the 13% derivation in the initial half of the year, followed by a decrease in the same during the latter half.

The table highlighted that only Akwa Ibom, Bayelsa, Delta, and Rivers states received higher allocations in the first half of the year compared to the second half, under the non-subsidy regime.

For instance, Abia State’s gross allocation escalated from N38.7 billion before the subsidy was removed (January to June 2023) to N46.30 billion, marking a 20% increase.

Adamawa’s allocation rose from N38.380 billion pre-subsidy to N46.803 billion, a 22% increment.

Conversely, Akwa Ibom’s allocation plummeted by 33% to N125 billion from N185 billion prior to the subsidy removal.

Anambra experienced a 15% increase in allocation to N53.603 billion, while Bauchi’s allocation surged by 21% to N53.937 billion.

States that witnessed a decrease included Delta with a 26% reduction, Rivers with 12%, Bayelsa with 20%, and Akwa Ibom with a significant 33% drop.

The remaining states generally saw an increase of at least 20%, with the exceptions being Edo at 4%, Ondo at 3%, and Anambra at 15%.

Another document titled “Analysis of State FAAC Inflows and State Expenditures Profile” from the NGF secretariat indicated that several states might struggle to sustain the minimum wage proposed by Organised Labour due to financial viability concerns.

The document showed that Abia’s total revenue was N94 billion, which would result in a deficit of over N17 billion after salary disbursements.

Ekiti, with a total revenue of N79 billion, faced a potential shortfall of over N13 billion after accounting for a recurrent expenditure of N93 billion.

Gombe’s revenue of N74 billion would not cover its recurrent expenditure of N82 billion, leading to a shortfall of N7.6 billion.

Imo would encounter a deficit of over N2.2 billion, with a total revenue of N95 billion against a recurrent expenditure of N97 billion.

Similarly, Katsina’s total revenue of N90 billion would fall short by N15 billion to cover a recurrent expenditure of N106.26 billion.

Oyo State was projected to have a shortfall of N2.6 billion, with a total allocation of N149.4 billion against a recurrent expenditure of N152 billion.

Other states facing potential shortfalls included Plateau (N17.01 billion), Sokoto (N3.440 billion), Yobe (N18.720 billion), and Zamfara (N27.369 billion).

Via.https://businessday.ng/news/article/minimum-wage-fg-targets-n65000-as-governors-settle-for-n57000/

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