Nigeria proposal to reduce minimum wage portends labor crisis

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Governors of Nigeria’s 36 States are poised for a showdown with Labour unions in the country over workers minimum wage. The Governors say that with severe shortfall in their revenues, it would be difficult for them to sustain the payment of the minimum wage of around 90 dollars. But the unions are having none of that and threatening to shut down the economy should the Governors refuse to pay.

It goes without saying that Nigeria’s 36 states have taken a direct hit by the sustained fall in global oil prices. They’ve seen their revenues shrink drastically with a significant reduction in their monthly allocations from the central government. Most are heavily in debts and owing several months of salaries.

Rising from a recent meeting, the governors made it clear the situation was becoming unbearable.

Labour unions in the country are vehemently opposed to both options. They are even demanding an upward review of the current minimum wage, which the governors say they cannot pay. Ironically, the unions have the backing of one of the governors, who himself used to be a labour union leader.

It’s a tough time for Nigeria State Governors. Despite receiving bailouts from the Central government about three months ago, the finances are still in the red. They could see their revenue depleted even further in the coming months if the price of oil fails to pick up in the global market. Without a robust monthly allocation from the central government, at least 25 of Nigeria’s 36 states can hardly survive on their own internally generated revenue Analysts say the situation now demands the governors get creative at generating their own revenue.

State governments in Nigeria have a bloated workforce. And it’s quite an irony that workforce can hardly generate the revenue it needs to pay itself. The governors are still maintaining that if the price of oil doesn’t pick up, they simply would have no choice than to either cut down the minimum wage or reduce the workforce. And with the unions position on the issue, it seems there might be a storm in the coming weeks.

 

 

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