In Nigeria, the problem of abysmal poverty and how to tackle it has become a sing-song among the political elite who ignore the primary source of the socially ill, unrealistically low minimum wage. Today, the minimum wage of N30,000 ($65) per month, places Nigeria among low-wage paying countries in Africa.
Though, the largest oil-producing and exporting country on the continent, Nigeria does not rank among the top 10 countries that pay the highest minimum wage per month in Africa. The countries include Seychelles ($432), Libya ($322), Morocco ($281), Gabon ($256), and South Africa ($242). Others are Mauritius ($241), Equatorial Guinea ($200), Congo ($154), Algeria ($151) and Kenya ($140). From this list, it is not surprising that Nigerians readily leave for just any other country in order to benefit from relatively higher pay.
The unrealistic minimum wage in Nigeria could be explained by the fact that since 1978 when government was compelled to fix wages, the rule of thumb has been used, instead of a critical look at the actual expenditure that individuals and households must incur on a daily or monthly basis. Countries that care about the welfare of their citizens ensure that minimum wage is enough to cater for their nutritional, housing, transportation, health, security, educational and communication needs. As a result, the line between minimum wage and living wage is blurred because a minimum wage that does not take care of the living expenses of citizens does not make any economic sense.
Leaders who work towards reducing the rate of poverty in their societies use the low-hanging strategy of raising the minimum wage. For instance, in the United States, the minimum wage is put at $15 per hour, such that an American who works six hours in a day earns more than a typical Nigerian who earns our monthly minimum wage. The current minimum wage of N30,000 came into effect in 2019. Since then, so much has changed, making the amount unrealistic in today’s world.
The need to deliberately adjust the country’s minimum wage is anchored on several contemporary socio-economic indicators, among them the fact that poverty in Nigeria is assuming an unmanageable proportion. The National Bureau of Statistics, in 2022, came out with its report on the multidimensional poverty index, which, in summary, states that about 133 million out of the 200 million population are living in poverty. The yardstick used to measure poverty in the research correlates with indices that measure living standards. They include nutrition, child mortality, years of schooling, school attendance, access to cooking fuel, sanitation, drinking water, electricity, and housing, and ownership of assets.
Beyond this baseline research, the rate of inflation in Nigeria, put at 22.04 per cent in the first quarter of 2023, is alarming. It shows that the rate at which prices of goods and services change is too rapid and high, making a lot essential of items to go out of the reach of the ordinary Nigerian. If the so-called subsidy on petrol is removed in the next few weeks, the impact the decision will have on individual pockets and families can be better imagined.
The implications of the unrealistic wages in the country are apparent in the country’s value system, where Nigerians engage in desperate measures, among them corruption and crime to make ends meet. Things are made worse because of the poor social service delivery. The average Nigerian household pays for its basic social needs out of pocket. In terms of education, health, transportation, security, water, etc, Nigerians are compelled to make their own private arrangements, which the country’s minimum wage cannot accommodate.
In many developed societies, the situation is totally different, as rail transportation, health insurance, mass housing, and almost free primary and secondary education take a lot of burden off the shoulders of many workers in public or private organizations.
In anticipation of the removal of subsidy on petroleum products, the federal government is contemplating a 40 per cent increase in some allowances for civil servants. The approach is a welcome development, but it is too cosmetic to tackle the dangerously low minimum wage in the country, which is not being paid by many state governments.
The payment of a realistic minimum wage is possible if government would review the allowances and pecks of office for political office holders. If the outrageous amounts politicians take home are streamlined, leakages in revenue collection blocked, loopholes for stealing public funds frustrated, and other economic crimes like oil theft stopped, there will be enough money to pay Nigerian workers the wages they deserve.
Private organizations must follow in the footsteps of the federal government and raise salaries, as their employees may be over-stretched in the coming dispensation.
In fixing salaries, a lot of factors must be taken into consideration, among them the inflation rate. In some countries, an increase in inflation rate would necessitate an increase in wages and salaries. It must take into consideration the location of the wage earner, and the availability of social infrastructure in that environment. For instance, the salary of a worker in Abuja, where the cost of living is high, may not necessarily be the same as what is paid in Gombe State, a relatively rural society. This is why using the rule of thumb to determine minimum wage for workers misses the objective of ensuring that people are taken out of poverty. This should be an agenda for the incoming government.