A herd of finance and economic experts has decried the level of wage inequality in the country, citing instances where food items alone gulps almost 100 percent of workers’ wages and salaries with nothing left to meet other basic needs.
Available data from the National Bureau of statistics (NBS) show that Nigerians spend more than half of their income on food and a whooping N61.08 trillion on food, other household items and services in the first six months of 2023.
This, the NBS said, was a 2.85 percent increase from the N59.39 trillion that was spent in the corresponding period of 2022 at the current purchasers’ value.
While the latest figures for 2024 are being awaited, the NBS stated that household consumption continues to account for the largest share of the country’s Gross Domestic Product in its ‘Nigerian Gross Domestic Product Report (Expenditure and Income Approach): first quarter (Q1), Q2.’
The National Salaries, Incomes and Wages Commission last week announced a wage increase of between 25 percent and 35 percent for only civil servants on the six Consolidated Salary Structures.
They are the civil servants on Consolidated Public Service Salary Structure (CONPSS), Consolidated Research and Allied Institutions Salary Structure (CONRAISS) and Consolidated Police Salary Structure (CONPOSS). Others are Consolidated Para-military Salary Structure (CONPASS). Consolidated Intelligence Community Salary Structure (CONICCS) and Consolidated Armed Forces Salary Structure (CONAFSS).
Although Bayo Onanuga, Special Adviser on Information and Strategy to President Bola Tinubu, said the increase does not apply to all civil servants and different from the minimum and living wage being worked out by the tripartite committee set up by the presidency, Paul Alaje, Chief Economist at SPM Professionals, has proposed a minimum wage of N100,000 per month for all civil servants.
He lamented that there is minimum wage injustice in Nigeria because what is being paid cannot afford workers’ children quality education, especially as it pertains to public schools, quality health care, good food, water and transportation, which is why politicians cannot allow their children attend such schools, hospitals, among others.
“I would say that there is no minimum wage justice in Nigeria and the reason is because when you look at what is inducing the need for rising minimum wage, it has to be the highest level of inefficiency in the system.
“The question is not about how much should minimum wage be. What economists bother about is that wage we are paying to labour, what is it spent on? So the question would be, labour has two to four children as allowable by Nigeria even though people can have 15, 30, 40 children depending on their preferences, it depends and some of them are out-of-school children.
“When you talk of human development index, it calculates income. It calculates health and most importantly, it also calculates education. So when you look at health, if somebody needs to go to the hospital today, the turnaround time in public can speak to the quality of care that we have in the private and quality of care we have in public hospitals, would you say that there is justification or minimum wage justice in Nigeria today? Definitely not,” Alaje stated.
He explained that for an average worker to send his children to school, the quality of education that is obtainable in 1991 in public school is different from what obtains today.
“What is the quality of education? The people that control public school, primary school, especially local government and to some extent, state, can they lead us in those areas and send their children to the same school? If they cannot, then what do you think of the quality of education where labour minimum wage earners will send their children to? Therefore, if it is not quality, it is not available? They may as well want to send their children to private school where they will need to pay,” Alaje stated during a Channel TV’s programme monitored in Lagos.
According to him, when talking about moderate minimum wage, it would make sense to look at cost of transportation from within town or taxi within Abuja, Lagos or Sokoto, before and after fuel subsidy removal.
To the economist, whether there are privileged citizens or not, what is important is that Nigerian workers are human beings and they should have access to quality health care. They should have access to education, they should have access to decent income.
According to him, even if inflation comes to one digit or the Central Bank’s target of 26 percent, it means inflation is still increasing but at a reduced rate.
“In 2018 when we had the new minimum wage, it was the value of two bags of 50 kg rice because a bag was an average of N9,000. When it became N30,000 that was the equivalent of one and half bag of rice. Today, a bag of rice is about N55,000 or N60,000.
“The wage that is paid to labour as minimum is about N40,500. What does this mean? It could not even buy a bag of rice. Therefore, a recommendation from all parameters means government should be looking at nothing less than N100,000.
“One percent inflation means there is an increase compared to last year, let alone 33.2 percent or 26 percent. So, whatever way you look at it, the economy is getting worse off. What the central bank originally projected for inflation is six to nine percent. And this I think, should be the goal of the Central Bank of Nigeria for the rest of the year,” the economist stated.
Nigeria’s food inflation rate reached 40.01 percent in March 2024, with a year-on-year increase of 15.56 percentage points from 24.45 percent in March 2023.
Similarly, data compiled by an international e-commerce organisation, Picodi.com, showed that the average Nigerian household spends about 59 percent of his/her income on food.
The report noted that this is the highest in the world, while South Africans spent 21.3 percent, United States 6.7 percent, Egypt 37.6 percent, Morocco 33.9 percent on food items.
According to Picodi’s research published in August 2023, an average worker spent N48,130 on food items alone per month, which is 60.4 percent higher than the country’s present monthly minimum net wage of N30,000.
Analysts say this amount is likely lower today given exchange rate depreciation and rising inflation.
However, assuming that the latest increase in minimum wage applies to all civil servants and would not fall below 35 percent of the current minimum wage (N30,000), Nigerian Tribune analysis indicates that the increase will amount to N40,500, below N48,186 which the Picodi report says an average Nigerian spends on food items alone and also a far cry from the N270,000 demanded by labour unions for food component.
“This means that the wages of those paid the least increased slower than the food prices and the minimum wage is not enough to cover even such a basic basket of products,” the report said.
Basic food items put in the basket by the report are milk, bread, rice, eggs, cheese, beef, fruits and vegetables, and among the countries included in the ranking, the highest percentage of spending on groceries can be found in Nigeria, Myanmar and Kenya at 59 percent, 56.6 percent and 56.1 percent, respectively.
Picodi.com said it used the latest household food and non-alcoholic beverages consumption statistics from Euromonitor and official government websites and for currency conversion, the firm used the average exchange rate data from Google Finance for July 2023.
The Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) that recently demanded N615,000 said the current minimum wage of N30,000 can no longer cater to the wellbeing of an average Nigerian worker, lamenting that not all state governors are paying the current wage award, which expired in April, five years after the Minimum Wage Act of 2019 was signed by former President Muhammadu Buhari.
This aligns with the views of the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, who had in a panel discussion prior to his appointment said at 57 percent, Nigeria ranks number one in the world as the country where people spend the most of their household income on food.
“It is not that we eat too much, it is because we earn so little. At about six percent the Americans spend the least on food,” Oyedele had said.
Gbemisola Alonge, Consultant at Africa Practice believes that the Federal Government should increase minimum wage to N200,000.
Alonge said the average Nigerian, as it is today, is not the average Nigerian in the past year, stressing that the economy has been very volatile as a result of reforms made since May 2023.
“So, one thing to also think about is what is the projection for inflation next year? What do we project the cost of healthy diets to be next year or in the next six months?” Alonge queried.
According to her, eating and nutrition or food was one of the criteria for arriving at this figure and then based on the NBS most recently released cost of healthy diets, “I think the most recent was in February 2024. So to get healthy diets, I think the average was around N950 per meal per day.”
She explained that the amount is for a person, but an average household consists of about four people.
“And then how much would that person need to survive on for a month. Then if we also think about transportation, the transportation price tracker, which the NBS released recently in March, showed that average transportation cost was around N979 to N990. And again, one thing we need to put into consideration is that this is a national minimum wage and that average for transportation ranges from N520 to as high as N1,000,” Alone stated.
Already, while Edo State governor, Godwin Obaseki, said he approved a new minimum wage of N70,000 for civil servants in the state due to the economic hardship occasioned by the removal of fuel subsidy by the Federal Government, his counterpart, Governor Bassey Otu of Cross Rivers State, announced N40,000 as the new minimum wage for civil servants in the state.
According to a statement from his office, Mr Otu said the new minimum wage aligns with “the realities of the time rather than sentiments.”
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