Minimum wage is the lowest amount of pay an employee can legally receive from his or her employer. Understanding the history of minimum wage in Nigeria is crucial to assessing its impact on the Nigerian economy and the welfare of its workers.
The Genesis of Minimum Wage in Nigeria
The introduction of a minimum wage in Nigeria was prompted by several factors. The Nigerian Labour Congress (NLC), an umbrella organization of trade unions, vociferously demanded improvements in workers’ welfare and threatened a strike if their demands were not met.
In 1974, the Nigerian government followed the recommendations of the Udoji Commission and increased workers’ wages, though public sector workers were the main beneficiaries. It was not until 3 September 1981 that the first minimum wage law was introduced. The law covered all full-time workers except seasonal workers and those who worked in enterprises employing fewer than 50 workers.
As a new government at the time, the last thing the President Shehu Shagari administration wanted was a nationwide strike. The first minimum wage in 1981 was 125 naira per month.
Historical Progression of Minimum Wage
The minimum wage in Nigeria has been revised a number of times but has not kept pace with the cost of living.
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- 1981: N125 per month (US$204 at the time)
- 1991: N250 per month
- 2000: N5,500 per month
- 2011: N18,900 per month
- 2019: N30,000 per month
- 2024: N70,000 per month
Reacting to recent increases in the cost of living, the labour movement has been calling for an upward review of the national minimum wage, currently N30,000 (US$24) a month.
In 2011, President Goodluck Jonathan signed a new National Minimum Wage into law. This amount was accepted by the federal government, leading to the enactment of the National Minimum Wage Act 2019 in March 2019.
Down memory lane, in 1979, when Shehu Shagari took over as a Democratic President, his government implemented a bump in the pay for politicians in public office. At the time, NLC asked for N300 per month as minimum wage.
Jonathan’s government increased it to N18,000 in March 2011. This meant a 140% increase in salaries. In 2016, the NLC made a formal request to review the wage from N18,000 to N56,000.
Nigerian workers set to benefit from minimum wage increase
Recent Developments
Nigeria’s national minimum wage rose by 133% to ₦70,000 monthly effective July 2024, up from ₦30,000. The labor unions had initially demanded ₦494,000, reduced to ₦250,000, before agreeing on ₦70,000.
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The increase was expected to reverse a 34.19% June 2024 inflation rate. The monthly living cost is approximately ₦43,200 for an individual and far more than ₦137,000 for four people.
As of October 2024, Lagos and Rivers States pay the highest minimum wage in Nigeria, pegged at ₦85,000 per month. Salaries in Nigeria are sharply different among industries, experiences, and locations.
On Tuesday November 6th, the Nigerian Labour Congress (NLC) called off a general strike after agreeing with the government to increase the national minimum salary by 67% to 30,000 Naira (US$ 83).
Impact and Challenges
The Nigerian labour market has two segments. Public-sector workers are the most affected by increases in the minimum wage. This is because the government cannot violate its own law, and nearly all public-sector workers are unionised.
Most Nigerians, however, are not affected by changes in the minimum wage. This is because 92.3% of the working age employed population work in the informal sector, mostly as farmers, traders or providers of services. Only about 8% of Nigerians (or 16 million), mainly in the public and “high-end” private sectors, would benefit from a minimum wage increase.
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Enforcement of minimum wage laws in Nigeria is at best weak. Consequently, many workers in the private sector, especially in services, hospitality, small private clinics and non-profit organisations, earn below the minimum wage. Most are not unionised and are unlikely to benefit.
The current minimum wage of N30,000 (US$24) in Nigeria cannot extricate workers from multidimensional poverty. The number of poor people in Nigeria has been rising for the past eight years, and will continue to do so until the minimum wage reflects the cost of living and recognises the salience of social services like health, education and housing.
Minimum Wage and Poverty
It depends on how one measures poverty. A nation can establish a poverty line (or a minimum income level) below which someone would be considered poor. This minimum amount is deemed adequate to maintain an acceptable living standard, given the cost of living in a given country.
In reality, however, Nigeria’s minimum wage traps workers in a cycle of poverty if a multidimensional measure of poverty is used - one that considers income and access to health, education and living standard indicators. As of 2021, when the latest data was compiled, 47.3% of Nigerians were multidimensionally poor.
Another reason the minimum wage does not protect Nigerian workers from poverty is that it is not indexed to inflation. Inflation has been rising faster than wage growth in Nigeria, thereby decreasing the real purchasing power of workers.
The current minimum wage has had a negative impact on the Nigerian economy. To make ends meet, many workers are now doing “side hustles”. Some public-sector workers are hardly available in their places of work.
Non-Compliance and Its Repercussions
Organizations that do not comply with these laws, may experience a range of problems. Non-compliance with laws on the minimum wage in Nigeria can result in fines and other penalties for the organization.
These include fines, a ban on the organization from conducting any business with the government, and even jail time for the individuals responsible. Non-compliance with the minimum wage in Nigeria can lead to a range of reputational issues.
Employees who are aware of being short-changed with respect to the minimum wage may decide to take action, leading to unfavourable publicity for the organisation. Furthermore, not complying with the minimum wage in Nigeria can have an impact on employee morale.
Not enacting minimum wage in Nigeria laws can result in legal action from the employees. This can lead to costly litigation fees for the organization whether or not they win the case.
The Role of Trade Unions
Nigerian unions have voiced popular concerns, and been able to mobilize beyond their members by linking workers’ issues to broader bread-and-butter issues and democracy struggles. Unions’ roles in promoting democracy in the 1980s and 1990s is well documented.
Nigerian political leaders have tried to break the popular power of the Nigerian trade unions throughout the country’s history, and Nigeria continues to be one of the worst countries in the world for workers, with “no guarantee of labor rights.” The minimum salary negotiations have again put the Nigerian unions where they belong: at the forefront of the struggle for poor people.
State-Level Minimum Wages
The minimum wage in each state of Nigeria is set by the respective state government. This is usually slightly higher than the federal minimum wage, as each state takes into account the cost of living and other factors when setting its minimum wage rate.
For example, in Lagos, the minimum wage is ₦35,000 per month, while in Kaduna it is ₦30,000.
| State | Minimum Wage (₦) |
|---|---|
| Lagos | 85,000 |
| Rivers | 85,000 |
| Kaduna | 30,000 |
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