A former Deputy Governor of the Central Bank of Nigeria, Kingsley Moghalu, has expressed his views on the country’s minimum wage, emphasizing the importance of an active production economy.
Moghalu argued that if Nigeria had a robust production economy, the government could afford to pay a minimum wage of N500,000. However, he acknowledged that given the current economic conditions, the government could realistically pay between N75,000 to N100,000 as the new minimum wage.
This discussion arises amidst ongoing negotiations between organized labor unions and the Nigerian Government concerning a minimum wage increase. The labor unions had recently called off a nationwide strike after a successful meeting with government officials regarding workers’ pay increments.
During the negotiations, the Nigerian Government initially proposed a minimum wage of N60,000 with a potential for further increases. In contrast, the labor unions demanded N494,000. It is believed that both parties are working towards a compromise as the discussions continue.
Following these developments, President Bola Tinubu instructed the Minister of Finance, Wale Edun, to calculate the financial implications of the proposed new minimum wage within 48 hours.
Commenting on the situation, Moghalu highlighted the limitations of Nigeria’s current economic productivity. He noted that the nation’s production levels can only support a minimum wage between N75,000 to N100,000. In a post on X (formerly Twitter), Moghalu elaborated:
“In the debates on the national wage in Nigeria we miss the fundamental point: there is little or no productivity in the economy. If we had a truly productive economy, there is no reason we can’t have the kind of minimum wage of 400 or 500K that labour wants. But we can’t, because the level of productivity in the economy cannot support it.”
He further clarified the broader implications of the minimum wage, noting that it affects not only government salaries but also wages in the private sector and for household staff. Moghalu emphasized the need to avoid a minimum wage that could exacerbate the already high inflation rates, stating:
“Remember, the minimum wage is not just about government salaries. There are not more than 2, at most 3 million civil servants in Nigeria. It is even more about what is paid in the private sector, to household staff, etc.
“All of this is why, all things considered, including avoiding a minimum wage that multiplies already ravaging inflation (assuming such a wage can even be paid), I recommend a minimum wage of between N75,000 and N100,000.”
