Why The Federal Government Can’t Afford To Pay ₦494K Minimum Wage – Kingsley Moghalu

As the negotiation regarding a new minimum wage for Nigerian workers continues after the nationwide strike that shut down many sectors of the economy was called off on Tuesday, Kingsley Moghalu, former Deputy Governor of the Central Bank of Nigeria, has argued that the proposal by the Labour Union is not sustainable.

“In the debates on national wage in Nigeria, we miss the fundamental point: there is little or no productivity in the economy. If we had a truly productive economy, there is no reason we can’t have the kind of minimum wage of ₦400,000 or ₦500,000 that Labour wants. But we can’t, because the level of productivity in the economy cannot support it,” Moghalu wrote shortly after the strike was put on hold for five days.

For weeks, the Nigerian government and the Labour Unions have been at a deadlock regarding a befitting minimum wage that will meet the needs of Nigerians, which has been exacerbated by the soaring cost of living. Initially, the Nigeria Labour Congress proposed ₦615,500 and later ₦497,000, while the Federal Government proposed ₦48,000. Although the government increased their offer to ₦60,000, the Union reduced their proposal by ₦3,000 to ₦494,000.

While in a late-night resolution, the Federal Government agreed to a wage above ₦60,000, leading to a temporary suspension of the strike, Moghalu has suggested a minimum wage between ₦75,000 and ₦100,000, insisting that a higher wage will affect the private sector.

“Minimum wage is not just about government salaries. There are not more than 2, at most 3 million civil servants in Nigeria. It is even more about what is paid in the private sector, to household staff,” the former Deputy CBN Governor said.

He added, “All of this is why, all things considered, including avoiding a minimum wage that multiplies already ravaging inflation (assuming such a wage can even be paid), I recommend a minimum wage of between ₦75,000 and ₦100,000.”

The Federal Government had earlier echoed the same sentiment in a statement by Mohammed Idris, Minister of Information and National Orientation, on Monday.

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“Labour’s current proposal of ₦494,000 is an increase of 1,547 percent on the existing wage and translates into an annual wage bill of ₦9.5 trillion for the Federal Government of Nigeria alone,” Idris said. “Such a wage bill would cripple the Nigerian economy by leading to massive job loss, especially in the private sector,” he added.

Hinting at the overall sense of insensitivity perceived from the political class, Moghalu also questions the productivity of the average Nigerian worker that will justify Labour’s proposed pay.

“In fact, speaking about productivity, how productive is the average Nigerian worker? How skilled is he or she, and thus how much value does he or she create? I know we are all upset at our insensitive political class, who do not care about the masses and only for themselves. But the economics of it all is far more complex,” he said.