Minimum Wage: Panel Should Prioritise Job Creation, Security During Negotiation – NECA

The Nigeria Employers’ Consultative Association (NECA) has called on the Tripartite Committee on National Minimum Wage to prioritise job creation and security amid Nigeria’s rising unemployment.

NECA’s Director-General, Adewale-Smatt Oyerinde, emphasized that productivity should be a key factor in determining higher wages.

“It is important to note that what the committee was constituted to negotiate is a new national minimum wage. A minimum (not maximum) that could be termed the ‘floor’ wage, below which no employer should pay. Employees should be able to navigate their paths toward higher wages through increased productivity and value addition,” Oyerinde stated.

The NECA DG pointed out the challenges facing Nigeria’s organized private sector, noting that in the past three years, hundreds of companies have either left the country, shut down, or altered their business models. He cited notable examples, including Jubilee Syringe Manufacturing, Proctor & Gamble, Unilever Nigeria, PZ Nigeria, GSK Nigeria, Sanofi Pharmaceuticals, Bolt Foods, Nampak, Microsoft, Jumia Foods, Equinor (oil & gas), Mayor Biscuits Company Limited, and Greif Nigeria.

He said: “According to the Manufacturing Association of Nigeria, about 767 manufacturing companies were shut down, and over 335 experienced distress in the country in the last three years. Additionally, there is a burgeoning N350bn worth of unsold inventory of manufactured goods, affecting small and medium-scale industries. The private sector is on the brink of collapse, with massive consequences for jobs,” Oyerinde explained.

READ ALSO: Minimum Wage: Labour Union Rejects Nigerian Govt’s N60,000 Fresh Proposal

He urged the National Minimum Wage Committee to shift its focus towards safeguarding jobs, enhancing the private sector’s capacity to create employment, and ensuring sustainability and the ability to pay wages.

The minimum wage discussions have been fraught with disagreements. The organized labor initially demanded a N615,000 minimum wage, later reducing it to N497,000 after the Federal Government and the organized private sector deemed it outrageous. The Federal Government and the private sector proposed a N57,000 national minimum wage. The last Tripartite Minimum Wage Committee meeting ended in a deadlock due to disagreements over the minimum wage.

Oyerinde cited data from the National Bureau of Statistics, noting that the combined rate of unemployment and time-related underemployment rose to 17.3 percent in Q3 2023 from 15.5 percent in Q2 2023, with the unemployment rate increasing significantly to 5.0 percent in Q3 2023.

“With these figures, more efforts should be concentrated on keeping more people in employment while the government continues to implement its planned interventions in transportation, food security, and general macro-economic stability,” Oyerinde remarked.

He highlighted the significant losses declared by organized businesses, over N1tn combined, and the challenges faced in maintaining the current N30,000 minimum wage. Many businesses are shutting down or relocating due to various pressures.

“Despite ongoing challenges, exacerbated by rising interest rates, astronomical logistics costs, increasing energy tariffs, and multiple taxes, the private sector remains committed to the N57,000 minimum wage, which represents a 90 percent increase. This commitment is aimed at supporting worker welfare and protecting jobs, which can only be guaranteed by the survival of enterprises,” Oyerinde added.

As the minimum wage discussions continue, NECA’s emphasis on job creation and security underscores the complex balance needed between fair wages and economic sustainability in Nigeria’s private sector.