Historical review Nigeria’s national minimum wage

In January 2024, the federal government inaugurated a 37-member tripartite committee to review the National Minimum Wage. As of today, the committee has not agreed on the new rate but, the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) have given the federal government a deadline of May 31 to develop a new national minimum wage.

What is interesting about the discussions about minimum wage has been the tension within the employer group, particularly within the public sector. In recent years, the state governments have argued against higher minimum wages because they believe they cannot afford them. On the other hand, the federal government always proposed a higher rate than the State Governments.
According to the Awolowo Foundation, Late Awolowo ” introduced and successfully implemented the first minimum wage policy in Nigeria and paid to Western Nigerians from October 1954 a minimum wage that was double the amount paid to workers of the same level in some other parts of Nigeria.” So, before independence, Awolowo had introduced a minimum wage to the Western Region. While the Western Region paid 5 shillings and six pence as minimum wage to workers, workers in the North earned only two shillings and eight pence.

The Late Chief Obafemi Awolowo, as President of Action Group and Premier of Western Region in June 1959, complained about “…the refusal of the Federal Government to introduce a policy of 5 pounds Minimum Wage”. He said this “has led to anomalies which must be most depressing and shattering to those concerned. Federal workers employed in the Western Region, for instance in the Post and Telegraphs and the Moor Planation, who work side by side, live in the same sort of houses and buy from the same markets with Western Region workers, get less in wages than the latter independence. ”

Late Chief Obafemi Awolowo made the fixing of a National Minimum wage a campaign issue. Speaking at a Press Conference held in the Premier’s Office, Ibadan, on Thursday, June 4, 1959, Chief Obafemi Awolowo said, “The Action Group and its Allies will terminate this inhuman and uneconomic state of affairs during the first six months in office and in any case, well before the day of independence. All workers employed by the Federal Government will be paid five pounds Minimum Wage with effect from October 1, 1959. At the same time, a law will be enacted by the Federal Parliament stipulating a National Minimum wage not below 5 Pounds, which must be paid by all employers of Labour in Nigeria.” Chief Obafemi Awolowo lost in the 1959 elections to Sir Abubakar Tafawa Balewa KBE PC, Nigeria’s first and only Prime Minister. The Prime Minister didn’t do anything about the Minimum wage law, delaying the dream of a National Minimum wage. So, before Independence, the federal government didn’t support a national minimum wage, but the regions pushed for it.

The first National minimum wage law was signed into law by the Late President Shagari in September 1981. This law was prompted by the advocacy of the Nigerian Labour Congress, which was led by the late Hassan Sunmonu. This new law covered all full-time workers except seasonal workers and those who worked in enterprises employing fewer than 50 workers. The wage was 125 naira per month. Using the exchange rate of US$1 = 0.61 naira as of 1981, this wage was about US$204. At the 2024 exchange rate, that amount paid as minimum wage in 1981 would be equivalent to about 265,000 naira (going by the current exchange rate of about US$1 = 1,300 naira). The current national minimum wage is N30,000 (US$24) a month. So, the minimum wage in 1981 was over eight times more than the current minimum wage.

Fixing the minimum wage is a constitutional issue in Nigeria. The current constitution of the Federal Republic of Nigeria made fixing the national minimum wage an item in the Exclusive list. Therefore, it can only be legislated upon by the National Assembly and not the state assemblies. So, while the Western region started a minimum wage, we have transformed this idea that was a regional initiative into one that only the Federal Government could determine. Are we the better for it?

From 1981 to 2018, Nigeria’s minimum wage changed three times. In 2000, it was increased to N5500. In 2011, President Goodluck Jonathan signed a new National Minimum Wage into law. The new law increased the minimum wage from N7,500 to N18,000. This new law applied to public or private sector employers with a workforce of about 50 persons.

The Government started the review of the National Minimum Wage in 2019. The unions demanded N30,000 per month as the National Minimum wage, the Federal Government proposed N24,000 and state governors N20,000. In January 2019, the National Council of State approved the sum of N 27,000.00 as the minimum wage, but the Governors counter–offered the sum of N 22,500.00. The NLC rejected the offer, but later proposed the sum of N30,000.00 (Thirty Thousand Naira). This amount was accepted by the Federal Government, leading to the enactment of the National Minimum Wage Act 2019 in March 2019. The new national minimum wage was approved and signed by former president Muhammadu Buhari. The new law increased the national minimum wage from N 18,000 to N30,000 monthly.

In 2024, discussions about a New Minimum wage are ongoing.
I want to draw these conclusions based on the history of minimum wage reviews in Nigeria.

First, most wage reviews happened under democratic rule, as opposed to when Nigeria was under Military rule.

Second, the states or regions usually view minimum wage differently from the federal government. In 2019, the Chairman of the Nigeria Governors Forum NGF and Governor of Zamfara State, Abdulaziz Yari, said: “We made it clear that we are not against the upward review of salary, we are in tandem with the NLC to get the minimum wage reviewed but the problem we are having is the capacity to pay what is agreed. As at today, most of the states are struggling to pay the N18,000 minimum wage. Some states are paying between 35 to 50 percent of the minimum wage and some states are owing salary. …it is not about only reviewing it but how we are going to get the resources to cater for it.”.

Third, negotiations on the minimum wage take a long time.

Fourth, while the Labour Unions ask for a minimum wage based on the economic realities of the time, the government proposes the minimum wage using the ability-to-pay principle.

Fifth, while the Private sector participates in the negotiations, it has a limited role compared to the others.

Sixth, local governments are not represented in the negotiations about the minimum wage.

Seventh, there is rarely an agreed amount that all parties commit to pay. In January 2019, the Zamfara State Governor, Abubakar Yari, also the Nigerian Governors Forum Chairman, warned the National Assembly against passing a new National Minimum Wage that would be difficult for states to pay because it was not realistic. He said, “It is easy to call figures, but when it comes to implementing in the field, it becomes a problem. Only Lagos can afford the N30,000 as minimum wage, not even Rivers can afford to pay that much.”

Eight, while the Minimum Wage Act always has an enforcement mechanism, nobody cares about enforcing the wage. Sections 9, 10, and 15 of the Act listed various offences. Section 10 (2) of the Act states that “an employer is liable upon conviction of such offence to a fine not exceeding N75,000.00 (Seventy-Five Thousand Naira) and an additional penalty of N10,000.00 (Ten thousand Naira) or less for everyday that the offence continues”. Offenses in section 15 of the Act attract a maximum fine of N250,000.00 (Two Hundred and Fifty Thousand Naira) or imprisonment for a term not exceeding 6 (six) months or both. In Section 11 of the Act, The Minister may authorize any officer to enforce the provisions of the Act. Section 12 empowers the Ministry of Labour and Employment and National Salaries, Incomes, and Wages Commission to monitor the implementation of the NMW in line with the provisions of the Labour Act and the National Salaries, Incomes, and Wages Commissions Act. Section 13 of the Act empowers an aggrieved worker, trade unions, and the Minister to enforce any part of the Act. But I am not aware that anyone has enforced the law. Perhaps the worst culprits are the state governments. As of October 2023, BudgIT stated that 15 states did not pay the N30,000 minimum wage fixed by the Muhammadu Buhari administration in 2019.

Ninth, some states have announced a new minimum wage for civil servants. For example, the Governor of Edo State, Godwin Obaseki, approved a new wage of N70,000 to take effect on May 1, 2024. Also, since January, the Lagos State Government has been paying civil servants an N35,000 wage award directed by the Federal Government. While Lagos claims it has not increased the minimum wage, Governor Babajide Sanwo-Olu said: “The civil servants and all public officers, they know that since January we have continued to pay the wage allowance of minimum of N35,000 over and above what they were earning before. People that were earning a minimum of N35,000 to N40,000 before, they are now earning over N70,000. ”

Ten, Chief Awolowo introduced the Minimum wage in Nigeria. It was a regional idea, and the regions paid better than the Federal Government.

Nigeria is currently negotiating a new minimum wage. However, we are still using similar templates, processes, methods, and negotiation styles to fix the National Minimum wage to what we have used in the past. This raises the question: will we get any better results? Would we get a wage that will make a real difference to workers?

We need to have an honest conversation about the Minimum wage. Do we want to fix any amount as the minimum wage, or do we want a wage that will be affordable to employers and reasonable enough to improve the livelihood of the workers? Until we resolve this question, we will keep fixing minimum wages that many employers will refuse to pay, and even when they pay, the wage will make no difference to most workers.