Why Governors, Others are Foot-Dragging on New Minimum Wage

As Nigeria anticipates President Bola Tinubu’s executive bill proposing a new minimum wage to the National Assembly, several states are struggling with the prospect of paying the proposed N62,000 minimum wage. Despite increased allocations since the removal of the fuel subsidy in May 2023, many states find the increments insufficient to sustain such payments.

The Organised Private Sector (OPS) clarified yesterday that no formal agreement was reached at the recent Tripartite Committee meeting on the New National Minimum Wage, only an alignment of interests. Governor Nasir Idris of Kebbi State distanced himself from governors suggesting an inability to pay the proposed wage, while Senator Ahmed Wadada of Nasarawa West called for a minimum wage of at least N150,000.

Currently, over 20 states have not provided any wage relief to their workers despite President Tinubu’s urging to follow the federal government’s example of paying an additional N35,000 on top of the existing N30,000 minimum wage. The primary reason for this hesitation, according to sources, is a lack of funds.

Data on federal allocations show that while most states received a 20-25% increase post-subsidy removal, others saw decreases. From January to June 2023, states received N2.188 trillion, increasing to N2.305 trillion from July to December, a mere 5% rise. For example, Lagos State saw a 28% increase in allocations, whereas states like Akwa Ibom and Delta saw reductions due to changes in the 13% derivation.

Many governors argue that the new minimum wage is unsustainable for states, local governments, and private sector employers, especially small and medium-sized enterprises (SMEs). They emphasize the need for a realistic and affordable wage that doesn’t force states to deplete their resources or incur debt, potentially leading to layoffs and inflationary pressures.

Governor Idris, however, remains committed to paying the agreed minimum wage, highlighting his ongoing negotiations in favor of Nigerian workers as a member of the tripartite committee. Meanwhile, the OPS, represented by Wale-Smatt Oyerinde of the Nigeria Employers’ Consultative Association (NECA), advocates for the new minimum wage to apply only to employers with 200 employees and above, to protect SMEs, which are the largest job pro.