Minimum wage: Economy will crumble if Labour has its way — Presidency
The Presidency has warned that if the organized labour has its way over its demand for nearly N500,000 as the national minimum wage, it will have serious consequences on the nation’s economy.
Special Adviser to the President on media and publicity, Ajuri Ngelale, who gave the warning while responding to questions on TVC’s “Politics on Sunday night, also said that President Bola Tinubu’s commitment to improving the welfare of Nigerians is never in doubt but is constrained by the present economic realities.
He said the amount being demanded by labour will have a negative impact on both the formal and the informal sectors of the economy.
According to him, a 20 times increase in wages can cause massive job losses, business closures, and unsustainable price increases for goods and services.
Ngelale said: “I think the starting point is to recognize that President Bola Tinubu would love to have a minimum wage in this country. That is even north of N1 million per month for every Nigerian, he would love to be able to do that. He does and his administration does have the highest regard for our people and he believes they do deserve the best.
“But he also recognizes that there are economic realities and fundamentals within the country right now that do not support what the organized Labour movement is advocating for and I want to be very clear this evening about what the consequences would be if organized Labour had its way.
“Right now there is this notion out there that the minimum wage conversation in the country is simply almost a conversation between a federal executive administration and organized Labour about a new minimum wage for the federal civil service. That is not what we’re talking about. We’re talking about a new national minimum wage for every Nigerian citizen, both within the formal economy as well as the informal economy.
“This has ramifications. Essentially, we’re moving from the current minimum wage where it is to, if Labour got its way, something north of N500,000 per month, you’re looking at almost 20 times, right?
“So the impact that would now have on the citizens of the country, we’re not talking about government now, we’re talking about our people, is, I want to be practical about this, if you’re thinking of the mom and pop shop that is dealing in chinchin and bakery and these kinds of goods and services.
“The idea that you are going to mandate them to 20 times whatever it is they’re paying their staff within that small business, you know that you are essentially mandating the closure of that business and you are literally, indirectly sacking the entire set of people who happen to be working there because that business is closing because they cannot live up to the minimum wages that organized Labour is asking for.
“I’ll be even more practical about this, aside from massive job loss across sectors, across our nation, at a time when we are looking for new job opportunities for the teeming youth population in the country.
“You’re also talking about private schools, for example, where you are now going to be mandating for not just teachers, but janitors, cooks and the like, a 20-times increase in the wages they will have to pay.
“What that will now mean is that if those schools don’t just close or if they don’t have to go into a massive retrenchment exercise, what it will also mean is for the Nigerian citizen right now, who is currently grappling with what we all agree is an unsustainably low minimum wage as it is today.
“He or she is now going to be grappling with school fees that are 10 times plus what they presently are today, not to talk of the price of food items, not to talk of the price of so many other goods and commodities that our people, even if they’re in a struggling state, can kind of try and afford, it now becomes totally unsustainable.
“So these are, I think, some of the real pragmatic assessments that need to be made public so that everyone understands that this is not just a matter of government not wanting to bulge or government wanting to maintain as much of its revenues as possible. No, we’re talking about an existential issue to the Nigerian economy and it should be treated as such.”
The Presidential aide urged Labour to consider the pragmatic implications of their demands such as increased school fees and prices of food and commodities.
On whether the president will shift his position on the wage increase, the spokesman said: “Let me say that we have never had a more pragmatic president who recognizes the very minute and acute challenges that our people face. I mean, this is a president who when he was governor went to the level of paying NECO fees for indigent families in Lagos State.
“I mean, that is the level of attention to detail that he pays to issues confronting his constituency. Now, the nation is his constituency and he’s not less concerned, if not even more so given the wide raft of responsibility.
“So he’s a man of empathy. He is going to do what is right, but he’s also going to ensure that while he does his very best for Nigerian families, irrespective of which part of the country they come from and what sector they operate in, he’s also going to ensure that there is not a mass retrenchment as a result of any kind of move by organized Labour to try and push the government to a threshold of agreeing to something that is in effect unachievable and unsustainable.”
