THE MINIMUM WAGE AND YOU: A DOUBLE-EDGED SWORD FOR EMPLOYERS AND EMPLOYEES

 THE MINIMUM WAGE AND YOU: A DOUBLE-EDGED SWORD FOR EMPLOYERS AND EMPLOYEES

By Daniel Okonkwo, Political Analyst and Human Rights Advocate

The debate surrounding the minimum wage in Nigeria continues to dominate public discourse, especially with the recent implementation of the new wage law in 2024. While the legislation aims to improve the standard of living for Nigerian workers, it also raises critical questions about sustainability, fairness, and economic impact—particularly for small-scale traders and employers in the informal sector.

Has the minimum wage policy brought tangible benefits, or has it become a burden due to poor economic planning and rising inflation?

Despite its good intentions, the current minimum wage of ₦70,000, implemented in July 2024, cannot even purchase a bag of locally produced rice. Before its enforcement, the fuel pump price had already surged to nearly ₦1,100 per liter, effectively undermining the purpose of the wage increase. In Nigeria, fuel impacts everything—when the price of fuel rises, so do the costs of goods and services. Conversely, if the fuel price is reasonable, it can positively influence the entire economic chain. Unfortunately, the resulting inflation has further devalued the naira, worsening the living conditions of the average Nigerian.

Who bears the brunt of these policies? It is the everyday man or woman—employers who cannot afford the wage increment and employees whose purchasing power continues to erode. Life has become increasingly difficult for common Nigerians, who are often excluded from policymaking processes that seem designed to deepen their hardship.

Were these policy changes truly intended to bring about meaningful change, or were they simply enforced without a holistic understanding of their consequences?

The National Minimum Wage Act was first amended in 2019, establishing a five-year cycle for review. In response to escalating inflation and economic instability, the Federal Government revised the Act again in 2024, shortening the review period to three years. This change reflects an attempt to better align workers’ wages with the rapidly increasing cost of living.

The wage has seen a significant rise—from ₦18,000 in 2018 to ₦30,000 in 2019, and now to ₦70,000 in 2024. Though laudable in theory, this increase remains highly contentious. In many urban markets, traders barely make enough to cover basic overheads such as rent, electricity, service charges, and municipal levies. While employees benefit from increased wages, many small employers face potential collapse under unsustainable labor costs.

This dilemma is compounded by inflation. To meet wage obligations, traders may be forced to increase prices, which reduces consumer purchasing power and can lead to business stagnation or failure.

Can government exemptions bring real relief? Although the Federal Government has introduced exemptions under the Minimum Wage Act, can these truly effect positive change for millions of Nigerians in dire need of economic relief?

Despite its broad reach, the Act exempts certain categories of workers and employers:

Small Businesses: Employers with fewer than 25 employees are not mandated to comply.

Part-Time Workers: Those working less than 40 hours per week fall outside the law’s scope.

Commission-Based Workers: Individuals paid by output or sales commissions are exempt.

Seasonal and Specialized Workers: This includes seamen, agricultural workers, and aircraft crew.

These exemptions help cushion the blow for micro and specialized enterprises while preserving essential protections for the broader workforce.

All employers not covered by exemptions are required to comply or face penalties. Employees or trade unions may lodge complaints with the Minister of Labour and Employment or escalate to the National Industrial Court.

The Act mandates that employers maintain employment and wage records for a minimum of three years. Non-compliance may attract legal penalties. Additionally, employers must provide transportation support for workers commuting over 16 kilometers, either through allowances or through the provision of sanitary and safe company transport.

Former President Olusegun Obasanjo has voiced strong criticism of the ₦70,000 minimum wage, describing it as insufficient to meet basic human needs like food, housing, and transportation. He also condemned the actions of some labor leaders, accusing them of compromising worker interests for personal gain.

> “Rather than negotiate in the interest of the workers, they do saber-rattling, and they are called into the room, and money in large amounts is stuffed into their hands, and they keep quiet,” Obasanjo lamented.

Such criticism accentuates a disturbing pattern of weakened union leadership and the vulnerability of workers despite nominal policy victories.

For self-employed traders and small business owners, the impact is significant:

Increased Operational Costs: Hiring or retaining staff now comes at a higher cost.

Price Hikes: To stay afloat, businesses may increase the prices of goods and services.

Business Adjustments: Many may need to adopt digital tools, reduce staff, or seek partnerships to remain viable.

There is a pressing need for proactive government intervention. Micro, small, and medium enterprises (MSMEs) must be supported through:

Access to Grants and Loans: Easily accessible, low-interest loans or grants will help businesses stay afloat.

Temporarily reducing or eliminating taxes on struggling enterprises can ease operational burdens.

Training programs in digital skills, financial management, and innovation are essential to help businesses adapt.

While the ₦70,000 minimum wage represents progress on paper, it demands a more nuanced and flexible implementation strategy. The government must acknowledge the diverse economic landscape and ensure policy buffers—especially for MSMEs.

Without meaningful support structures, this well-intentioned law is becoming a burden rather than a blessing—endangering both th

THE MINIMUM WAGE AND YOU: A DOUBLE-EDGED SWORD FOR EMPLOYERS AND EMPLOYEES

e businesses it depends on and the workers it aims to protect.