Nigeria’s new minimum wage: Too much to ask?

LAgOS: On the campaign trail for re-election in February, Nigeria’s President Muhammadu Buhari may have spoken too soon when he backed an initiative to hike his country’s minimum wage by a whopping two thirds.

Buhari, who had been advised on the wage by a negotiating committee made up of union representatives, the government and the private sector, praised the “patriotic and professional” members.

The recommendation to hike the minimum wage to 30,000

(€$ naira 8272) from 18,000 was “realistic, fair and implementable” and would be studied by the executive “within the shortest possible time”, before being returned to parliament for final approval, he said.

The unspoken agreement was that Nigeria’s unions, which had threatened to paralyse Africa’s largest economy of more than 180 million people with a massive, open-ended strike, would deliver their members’ vote to Buhari in a presidential poll set for February 2019 in return for the pay hike.

But the very next day the information minister poured cold water on the idea, claiming that the Nigerian government had in no way acceded to the 30,000 naira demand and said this “recommendation should first be studied”.

Standing in the way of Buhari’s strategy to win the popular vote with the wage promise are the 36 state governors who say they are already struggling to pay civil servants and public officials with the current wage.

David Umahi, governor of southeast Ebonyi state, warned this week that the 30,000 naira minimum wage for public servants couldn’t work.

“Many states are experiencing various problems and cannot pay salaries,” he told reporters after Buhari’s remarks.

Even if it went through, a higher wage would still be modest given that a 25-kilogramme bag of rice costs nearly 10,000 naira.

“It is very low considering the cost of living,” Charlie Robertson, Renaissance Capital economist and Nigeria specialist, told AFP.

But attempting to do more would be unrealistic because Nigerian businesses already have high overheads, and many workers are unqualified, making a pay hike hard to justify, he said.

Nigeria’s patchy power supply is another factor undermining the competitiveness of businesses, and therefore their margin for any wage increase.

“Nigeria’s difficulty on the minimum wage is that because its electricity, literacy are less than most countries, its wages must be less too.

“Or it will attract no foreign investments,” Robertson said.

“30,000 is a sensible compromise but still debatable.” — AFP