GOVERNOR of Kaduna State, Nasir El-Rufai says increasing the national minimum wage could lead to an upward of 300 to 400 per cent spike in the wage bill of the federal government.
El-Rufai also said that it could discourage investors and private sector practitioners as they could be frightened by the fact that labour costs more in Nigeria than in other countries in Africa.
The governor expressed these opinions during Channel Television’s ‘Sunrise Daily’ on Friday. He recalled that a similar move by the federal government during the military regime of Abudulsalami Abubakar had led to a tripling of the government wage bill at the time.
“It’s not just the minimum wage,” El-Rufai explained. “Now we have moved the minimum wage by 50 per cent, but if you allow that increase to translate at all levels, allowances (housing allowance, transport allowance) are linked to the minimum wage as percentages.
“What will happen is that you are not (just) getting a 50 per cent increase on the wage bill, but 300 or 400 per cent increase.
“We have to be careful about that. State government must look at this very well. Even the federal government must look at this very well and ensure that the impact of this increase in the minimum wage and other increases for other grade levels does not translate into a level of wages that the country or the state governments cannot sustain, or even the private sector cannot justify for Nigeria to be competitive in the global economy.
“Because the cost of labour is an input in determining the price of good and services and we are operating in a global economy and we will lose out if our cost of production ends up being too high.”
Speaking further, El-Rufai said he believes there should be drastic reforms that would bring about a reduction in recurrent expenditure − personnel and overhead − both at the federal and state government levels.
He said there are many people working in government establishments that are not needed whereas there are other sectors, like the health and education sector, where there is a lack of adequate personnel.
For instance, he said there were still typists in government offices even though nobody uses typewriters anymore.
On personnel costs, El-Rufai said “we have to sit down with labour unions and have a very mature conversation about the size of the public service, the kind of government that is lean and fit for purpose. We have to have a sensible conversation about that, that puts the state and national interests ahead of any narrow interests”.
And on overhead costs, he said there is room for reduction as there is a lot of waste in the government.
“There is too much travelling, there are too many conferences discussing over and over issues that are settled. What Nigeria needs is not more conferences and more discussions but implementing already agreed policies.
“All these investment summits that we attend in foreign countries, they are a total waste of time. If you want to do investment summits, do them within Nigeria, invite the investors to come here.
“We can reduce the number of aides we have. We can reduce the number of ministries, we can do all that and the recurrent component can reduce.”
The issue of an increase in the national minimum wage has been ongoing for some time now especially as the general election draws nearer.
A committee set up by President Muhammadu Buhari to look into the issue came up with a report recommending the sum of N30,000 as the new minimum wage, despite the fact that state governments said they would be able to pay only N22,500 and the FG agreed to pay N24,000.
However, the Council of State (comprising former presidents and heads of states) reviewed the report and approved the sum of N27,000 for state and private sector workers and N30,000 for federal workers. This was forwarded as an executive bill to the National Assembly for passage into law, passing a second reading on Thursday, albeit with a slight amendment that all workers, whether in federal, state or private sector employment, are to be paid N27,000.