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Thursday, July 18, 2024

In search of wages for hapless Nigerian workers

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By Isa Aliyu Chiroma

The gridlock between the NLC and FG over increasing the minimum wage is a hot topic in economic and political circles. Advocates argue that raising the minimum wage is essential for reducing poverty and improving living standards for millions of Nigerians, while some caution that it could lead to job losses and increased inflation. As states grapple with these complex
dynamics, the need for innovative strategies to bolster internal revenue generation is essential.


A significant portion of the workforce in Nigeria earns near or at the minimum wage level. For these workers, the current federal minimum wage of N30, 000, often falls short of providing a livable income. This wage stagnation has exacerbated income inequality, leaving many families struggling to cover basic expenses such as housing, healthcare, and education.
Raising the minimum wage would directly address these economic disparities, benefiting nearly 60% of federal workers, lifting many out of poverty and injecting billions of Naira into the economy through increased consumer spending. This, in turn, could stimulate business growth and job creation, fostering a more robust and equitable economic terrain.


While the benefits of a higher minimum wage are clear, the path to implementation is full of challenges, particularly for state governments. One major concern is the potential for job losses, especially in small businesses that may struggle to absorb increased labor costs. These businesses often operate on thin profit margins and may be forced to reduce their workforce, cut hours, or even close their doors in response to higher wage requirements.

Moreover, states with diverse economic hurdles face varying impacts. For instance, states with a higher cost of living, like Lagos, may find it easier to justify and implement higher wage floors compared to states with lower living costs and weaker economic bases. This disparity necessitates a nuanced approach to minimum wage policies, tailored to the specific economic
conditions of each state.

To mitigate the economic challenges posed by a higher minimum wage, states must explore innovative ways to increase their internal revenue streams. This can be achieved through a combination of tax reforms, investments in infrastructure, and the promotion of economic diversification.


A common concern linked to raising the minimum wage is the potential for inflation. Higher wages can lead to increased costs for goods and services as businesses pass on their higher labor costs to consumers. However, this inflationary pressure can be managed through careful economic planning and policy measures.


Government can monitor and regulate price increases to prevent excessive inflation. Additionally, increasing productivity through investments in technology and workforce training can help businesses absorb higher wage costs without significantly raising prices. It’s also crucial for wage increases to be gradual and predictable, allowing businesses to plan and adjust their operations accordingly.


Increasing the minimum wage is a necessary step towards reducing poverty and fostering economic equity. However, it presents significant challenges that require innovative solutions from state governments. By reforming tax systems, investing in infrastructure, and diversifying their economies, states can generate the internal revenue needed to support higher wages.

Careful management of inflationary risks will also be essential to ensure that the benefits of wage increases are not eroded by rising costs of living. Balancing these elements will be key to creating a fairer, more prosperous society.

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