WITH the current economic hardship facing the country, the federal government might need to consider nothing less than N100,000 as a benchmark for minimum wage, an analysis by The ICIR has shown.

The above benchmark wage would cover the cost of feeding, transportation, electricity bills and other necessary expenses incurred within a month for an average worker. 

However, if indices such as the inflation rate, exchange rate, and other bills or taxes continue to increase, the wages may not suffice. 

On June 3, the organised labour unions commenced a nationwide strike that suspended activities, including courts, schools and the power grid, within the country to protest for an increase in Nigeria’s N30,000 minimum wage. 

The unions, the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) are proposing N615,000 which is almost a 2,000 per cent increase. However, The ICIR reported that the federal government pleaded with the organised labour in Nigeria to reconsider its decision to embark on a nationwide strike, noting that the government had offered to review the minimum wage to N60,000. 

“The government is pleading with labour to reconsider its position. The federal government has already made an offer of N60,000, and whatever the government does is in the interest of Nigerians. We won’t like to do something that will throw the country into another problem,”, the government said. 

This was, however, rejected, despite a subsequent meeting with the leaders of the National Assembly and the federal government while other critics have argued that the proposed wage by the union was outrageous. 

For this report, The ICIR used available economic data to make projections for Nigeria’s minimum wage benchmark. The benchmark was hinged on the current economic realities and cost of living, most of which increased by almost 100 per cent since President Tinubu assumed office in May 2023. 

A case study of John Paul

To understand the projection, an abstract person, John Paul, was used to mirror an average Nigerian routine expense in a month, backed up by available data. 

According to the International Labour Organisation (ILO), the minimum wage is the minimum amount of remuneration an employer is required to pay for the work performed during a given period. Unlike a living wage, which is a more standard and satisfactory payment, the minimum wage serves as a baseline that ensures the worker can meet their essential need. 

The ICIR checks show that if John Paul was to meet his monthly essential needs, he would need to earn over N100,000 as minimum wage. 

Here are the essential needs:

• Feeding: The National Bureau of Statistics (NBS) report on the Cost of a Healthy Diet (CoHD) shows that as of April 2024, Nigerians spend N1,035 to eat a healthy diet. This is 5.4 per cent higher than the amount recorded in the previous month, March 2024, with N982. To better understand this, if John Paul were to eat at least two healthy diets daily for a month, he would be spending N64,170 monthly. 

• Transportation: The NBS data also showed that the average fare paid by commuters for bus journeys within the city per drop was N967.76 in April 2024. This means that if John Paul were to go to the office communing by bus, he would need approximately N2,000 — and for 20 working days in a month, this amounts to N38,720 in transportation.

• Electricity: A survey by Statista, a global data and business intelligence organisation, said that most Nigerians, representing 44 per cent, pay about N5,000 monthly for electricity bills as of 2023. 

Already, the total of these above essential needs amounts to N107,890 spent by John Paul,  an average Nigerian, monthly. 

• Other expenses: According to NBS, other major contributors to the increasing inflation rate within the country include housing bills, water bills and clothing. If the federal government were to factor in the average cost of these bills, there are indicators that the minimum wage might be pegged between the range of N130,000 to N180,000. 

Table showing the average amount spent by a Nigerian monthly. Source: NBS, Statista

World Bank benchmark

According to the World Bank, an employee’s income is calculated based on the country’s Gross National Income (GNI). For Nigeria, which is categorised as a lower middle-income economy, the GNI per capita ranges from $1,040 to $4,095. This is an average of $2,571 paid annually. 

As of June 3, a dollar was exchanged for N1,475. If this is multiplied by $2,571, an employee should be getting N3.79 million annually (N3,792,225).

This implies that the monthly remuneration should be approximately N316,019, which is half (51 per cent) of what the organised labour union is demanding. 

Table showing World Bank income classification by their resident’s average income 

Meanwhile, The ICIR reported a social critic and founder of Stanbic IBTC Bank Plc, Atedo Peterside said Nigerian government officials’ flamboyant lifestyle was a major obstacle in the minimum wage negotiations.

According to him, “The Nigerian minimum wage negotiations were destined to be unnecessarily difficult because the federal government poisoned the well for responsible negotiations by approving an irresponsible N90 billion for legislators and others, creating the false impression that they were awash in cash.”

However, in a recent development, the organised labour unions have agreed to suspend the strike for a week to allow negotiations between the unions and the federal government.

Kehinde OGUNYALE

Kehinde Ogunyale tells stories by using data to hold power into account. You can send him a mail at [email protected] (jameskennyogunyale@gmail) or Twitter: Prof_KennyJames