The federal government and organized labour have yet to reach an agreement on the new national minimum wage despite several rounds of negotiations. The government’s latest offer of N62,000 per month falls short of labour’s revised demand of N250,000 per month.
Negotiations began earlier this year with both sides far apart in their demands. The federal government initially proposed N48,000, which was met with labour’s demand of N615,000. After several rounds of discussions, the government increased its offer to N60,000, then N62,000, while labour reduced its demand to N494,000 and eventually to N250,000.
Despite these adjustments, no consensus has been reached.
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Government’s Strategy
The new development in negotiations began when President Bola Tinubu directed the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, to present a new minimum wage and its cost implications.
This template was presented to labour leaders during their recent meeting.
The tripartite committee, formed to harmonize decisions, recommended an upward review of the national minimum wage. The committee urged President Bola Tinubu to consider N62,000 per month, as agreed by the government and the Organised Private Sector (OPS), and N250,000 per month as proposed by organized labour.
“Having critically examined the national minimum wage using all necessary parameters and applied the social, economic, and political considerations as well as relevant ILO conventions and international best practices, it is agreed that there is a need for an upward review of the present national minimum wage,” the committee stated.
Labour’s Position
President of the Trade Union Congress (TUC), Comrade Festus Osifo, stressed the importance of wages reflecting the current economic realities and the cost of living. He insisted that the government’s offers have consistently fallen short of what is necessary to ensure a decent standard of living for workers.
Early this month, organized labour went on strike in response to the government’s initial proposal of N60,000, deeming it insufficient given the current economic challenges. The strike, highlighting the urgency and importance of a wage adjustment that reflects the rising cost of living, forced the government to promise new fresh increase.
Governors’ Concerns
The Nigeria Governors’ Forum (NGF) expressed strong reservations about the proposed N60,000 minimum wage, describing it as unsustainable. Many states, according to the NGF, would face financial ruin if forced to allocate such a large portion of their budgets to wages.
“Paying N60,000 minimum wage would exhaust the entire federal allocation received by many states just on personnel costs, leaving zero funds for investments in infrastructure, healthcare, education, and other priorities,” the NGF warned in a statement.
“We appeal that all parties involved, especially the labour unions, consider all the socioeconomic variables and settle for an agreement that is sustainable, durable, and fair to all other segments of the society who have legitimate claim to public resources.”, the governors added.
A governor from the South lamented, “How do I take such huge amounts to pay less than 200,000 civil servants in the state, which does not constitute more than 5 percent of the population?”
However, Labour and other stakeholders have pointed to the increment in the Federation Account Allocation Committee (FAAC) distributions to counter the governors’ claims that a minimum wage above N60,000 is unsustainable. They argue that the increased revenues should enable states to pay higher wages without compromising other fiscal responsibilities.
Impact of dwindling economy
The economic context of these negotiations is crucial. Nigeria has faced severe economic fluctuations in recent years, including a recession in 2016, modest growth until 2019, and a downturn in 2020 due to the COVID-19 pandemic. The removal of fuel subsidies and the implementation of a floated exchange rate market, have led to increased prices of goods and services, a decline in purchasing power, and rising poverty levels.
Inflation rose from 22.4% in May 2023 to 33.69% in May 2024, with petrol prices increasing from N198 to N626 per liter within six months.
Data from the Nigeria Governors’ Forum shows that many states, including Abia, Ekiti, Gombe, Imo, Katsina, Kogi, Oyo, Plateau, Sokoto, Yobe, and Zamfara, have recurrent expenditures that exceed their total revenue, making them financially incapable of paying the proposed N60,000 minimum wage. Zamfara State, for instance, has a negative net revenue of N27.3 billion.
However, the ongoing stalemate could lead to another strike by organized labour, which insists on a minimum wage that reflects the economic realities faced by Nigerian workers. The federal government and organized labour remain at an impasse over the new national minimum wage.
As the tripartite committee forwards its recommendations to Tinubu, the country awaits a resolution that balances the economic realities facing both the government and its workers. The outcome of these negotiations will significantly impact Nigeria’s economic stability and the livelihood of its workforce.