With the Federal Government‘s announcement of a new minimum wage, things should be looking up for the average Nigerian worker. Udeme Ekwere, in this report, examines the effects of the new wage on the standard of living and prices of commodities.
Last Thursday on the way to Ajah, through the Lekki Ajah Expressway, some passengers in a commercial bus engaged themselves in a conversation that almost degenerated into a quarrel. What began as a mere intellectual debate over the construction of toll plaza on the expressway gradually brought to the fore the sundry impressions Nigerians have of the government of the day.
While some argued against the toll plaza, saying why it was not necessary to put them there, others felt considering what the Lagos State Government had done, it would be necessary to support it with a token.
It was this last argument that caught the attention of the bus driver, who said it was the headache of the passengers whether toll plazas were constructed all over the country or not. He was also quick to remind the passengers that the Federal Government had increased the minimum wage, which he wrongly put at N20,000 instead of N18,000.
To him, passengers should be prepared to pay more since there was an increase irrespective of whether they work for the Federal Government or not. Before he ended his tale, a market woman inside the same vehicle said their own union was also getting prepared to add a token to whatever they were selling.
The above scenario usually marks any pronouncement by the government to increase wages in the country. Whether it has been effected or not, the mere mention by the authorities is always enough for those in the informal sector to change the price tags on the items.
This has again followed the 63 per cent increase announced by the Federal Government, which is to take effect from the end of July. The amount moved from the N11,000 formerly paid to the least earning civil servant in the country.
Already, the leadership of the Nigeria Labour Congress has accepted the increase, with the Secretary-General, Mr. John Odah, and the President of the Trade Union Congress, Mr. Peter Esele, expressing satisfaction at the development.
Odah described the increase as a negotiated agreement with the public sector unions in order to bridge the gap between the salaries of political office holders and career public servants.
While reiterating the Federal Government‘s commitment to implementing the payment of N18, 000 per month for all civil servants as recommendations by the Belgore‘s Committee on the National Minimum wage, the Secretary to the Government of the Federation, Mallam Mahmud Ahmed, noted that Nigeria was making ”history in terms of our ability to demonstrate commitment to the-course of the Nigerian workers and in a more dignified way.”
In anticipation of its implementation, people have begun to calculate the effect that the increase will have on prices of commodities in the market and others.
A visit to the Mushin market by our correspondent last Saturday showed that even the market women have begun to make plans to increase prices of their goods.
A tomato dealer in the market, Mrs. Moji Ibrahim, says that there will definitely be an increase in prices of tomatoes and pepper.
She says, ”I am aware that government has added to the salary of workers, and we know that it will mean an increase in the prices of goods. This is true because, more people will have more money to throw around and so, prices will rise.
”When things like this happen, it is normal for prices of goods to increase, that means that tomatoes and pepper coming in from the North after the increase, would have increased, and so we would have to increase our prices accordingly.”
A meat seller, who simply identified himself as Sule, says that the prices of meat in the market have already increased following the announcement. He also disclosed that more increases in prices of goods were expected when the wage increase finally takes off.
According to him, ”There is no how prices will not rise, because prices of goods are not generally stable here, so with this increase, we expect prices to rise further.
The Managing Director, Trearoy Properties Limited, Mrs. Tolulope Uko, explains that there is no way prices of goods would not be affected following the increase in minimum wage of workers.
She says, ”The first thing is that the market forces will automatically increase the prices of goods in the market. You know that a rise in the wage of workers will mean an increase in the standard of living. People will be willing to spend more and so, the market forces will jerk up the prices of goods to match the wage increase.”
She, however, advises on the importance of government putting strategies in place to ensure that prices of goods are not increased arbitrarily. This, according to her, is important if government is to prevent inflation in the country.
To the President, Manufacturers Association of Nigeria, Mr. Bashir Borodo, there is more to be taken into consideration than just an increase in the wages of workers.
He says it is good that the Federal Government agrees to increase the wage in the first place, due to the fact that the previous amount was insufficient for workers.
According to him, ”The idea of the increase is laudable on the part of the government, as it will go a long way to alleviate workers’ suffering, MAN supports the FG on this move.
”However, we do not agree with the imposition of this amount on the private sector, due to the fact that most of the companies in the private sector may not be able to afford this amount for their workers.”
He notes that there should be room for negotiation on the part of the private sector, adding that it is key that the new wage is not imposed on the private sector, as they may not have sufficient funds to go into that kind of commitment.
He adds that the issue of regional variation is also important, as some amount, which may be enough for individuals in a particular part of the country, may not be enough for individuals living in another part of the country.
More importantly, Borodo says that the effect of this increase may not be felt in the Nigerian market.
He says, ”If this wage increase is channeled to patronise made in Nigeria goods, it will translate into a positive development for us, but the tendency is that Nigerians will want to channel most of this additional funds into imported and foreign goods, and this will cause two things for our country.
”The first thing is that there would be a drain on our foreign exchange reserves, which would affect us negatively, and the second is that we will be growing the economy of other nations and transferring jobs to the foreigners, this would be detrimental to the health of our economy.”
He adds that the attendant effect will be a drain in government revenue, which will in turn affect its ability to meet its obligations to the citizens.
He notes that it is essential that the increase in the minimum wage should come as a complete package, with the development of infrastructure, as good infrastructure will help reduce cost of production, thus boosting economic growth in the nation.
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