Still on the minimum wage conundrum

Threats that the Nigeria Labour Congress (NLC) would embark on industrial actions are not new to the Nigerian masses. We have heard it on several occasions over the year. Warning strikes, aborted strikes, indefinite strikes, we have had it all. However this time, there were indications it would be a notch higher. The NLC wants to shut down the country. They want to make it an unforgettable strike, a total shut down. But how did we get here? The debacle between labour and its chief employer – the Federal Government – is the minimum wage. It is currently set at N18, 000 ($51.43 at an exchange rate of N350 to a dollar). Labour initially demanded N56, 000 ($160) but after negotiations, it was whittled down to N30, 000 ($85.71).

The minimum wage in the United States of America is 7.25 dollar per hour. In 24 hours, the lowest earning American worker earns 174 dollars, more than what labour was initially asking for. Of course, the standard of living in the United States of America is higher than Nigeria’s. Talking of standard of living, there are variations even in Nigeria.

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From Maiduguri to Osogbo to Yenagoa, the economics and standard of living vary. With this in consideration, why don’t we have several minimum wages, shouldn’t the states cut their coats according to their cloth?

Well the constitution states that “there shall be one minimum wage”. However, it is worthy of note that this is only a national minimum; states that can generates more can pay more. I heard this is what is obtained in the United States of America. Several states pay above the minimum.

What are the spillovers and consequences of an increased minimum wage? Basic economics state that more money in circulation, more purchasing power leads to inflation. The inflation rate in Nigeria stands at a double-digit; it will further increase. The Nigerian people will have to bear the brunt of increased inflation.

An increased minimum wage will increase the countries wage bill. We already spend more than 70 per cent of our budget on recurrent expenditure with the needed capital expenditure suffering.

Then what is the solution to this conundrum? I want to go down a path that most people are not traversing now. As explained by Mr. Henry Boyo, an economic expert, several months ago when this debacle first reared its head, the solution lies in strengthening the naira. Strengthening the naira will translate into increased purchasing power. A stronger naira means consumers will buy more for less. It will even bring down the inflation rate. It sounds too good to be true. The Central Bank of Nigeria is inhibiting the naira with its policy of exchanging the dollar for the naira, and distributing newly minted notes as allocation to the states every month. This leads to saturation of the market with the naira and which subsequently results in a weak currency. Henry Boyo has been shedding light on this disastrous practice and calling for change since 2002.

I plead with the Nigeria Labour Congress to channel their energy to demanding for strengthening the naira. Not only will the current N18, 000 be more valuable, the bulk of our economic woes will be addressed.

Adeyemi Ahmed Abiodun, adeyemiahmedabiodun@gmail.com