Why FG will not pay N615,000 minimum wage
Why FG will not pay N615,000 minimum wage
+What can the Midpoint Income Do?
Why FG will not pay N615,000 minimum wage
The Nigeria Labour Congress (NLC) has put forward a significant proposal for a new minimum wage of N615,000 per month, highlighting the urgent economic challenges and steep rise in living costs across the country.
Many doubt the feasibility of the NLC’s proposal for a minimum wage of N615,000 per month due to concerns that it ignores Nigeria's economic realities.
The demand surpasses the income bandwidth of people in a lower middle-class country such as Nigeria.
Income categorisation is often calculated using a country's Gross National Income (GNI) per capita.
This signifies what range of income employees in an economy receive.
Nigeria's GNI per capita ranges from $1,136 to $4,465, positioning it as a lower middle-income economy.
The benchmark income range for lower-middle-income countries like Nigeria is between a monthly income of N118,547 and N464,100. Workers may expect something closer to the midpoint at N291,380 monthly.
According to the World Bank, the middle-income classification depicts a country with moderate economic development. These countries often experience rapid urbanisation and face challenges such as income inequality, limited access to healthcare and education, and infrastructure deficits.
The NLC's proposal surpasses these established parameters, prompting criticism from the organised private sector and states.
They argue that implementing such a substantial wage increase may strain economic resources and disrupt existing financial frameworks.
The call for a higher minimum wage is due to growing living expenses.
However, the country’s general income levels limit the aspiration for a pay rise that is commensurate with the inflationary rate.
All the same, going by the country’s economic realities, any minimum wage less than N118,547 is too low and any pay rise beyond N464,100 may be unaffordable for employers of labour in the private and public sectors.
In other words, the NLC’s push for N615,000 may not be feasible.
For Nigerians, what can the lowest average monthly salary in lower-middle-income countries do?
The breakdown of household spending in Nigeria based on the percentage of total expenditure provides significant insights into spending trends and the financial challenges that families face.
Food stands out as the biggest category of expenditure, with 56.6% of all household spending going towards it.
The next largest expense is transportation, accounting for 6.4% of the total. Expenditure categories such as fuel/light, clothing, household goods, entertainment, and water represent smaller shares of expenditure,
Ideally, the lowest average monthly income for a lower-middle-income country as Nigeria should be N118,547. This projects what employees can earn to meet basic living expenses.
For a family of five in Nigeria earning this, financial constraints may pose challenges in meeting essential needs such as housing, food, and healthcare.
What can the Midpoint Income Do?
The midpoint average monthly income of N291,380 illustrates a significant increase from the lowest level, suggesting a range of mid-level salaries across various professions and sectors.
Positions falling within this bracket typically entail more experience, specialised skills, or managerial responsibilities, reflecting a higher earning potential compared to entry-level roles.
Households earning around the midpoint average monthly income of N582,760 enjoy a higher degree of comfort, able to afford necessities more comfortably due to increased earning potential.
What can the Highest Pay not Do?
The highest level of earning potential for lower-middle-income countries workers is represented by the maximum average monthly salary of N464,100.
Pay at this level is frequently linked to occupations in senior management, specialised fields, or sectors of the economy that provide larger compensation packages.
People who make this much money usually have more financial stability and can afford a better standard of living.
It appears that a family of five with 2 adults each earning a minimum wage of N464,100 would just be fine, using any extra savings from food to augment insufficient funds for transport, education, or rent.
While we hope for better income sources for workers in Nigeria, we can deploy time-honoured coping skills to spend wisely and save for wealth creation.
Wishing all Nigerian workers a restful holiday tomorrow!
This edition of Pocket
Science was written by Khadijat Kareem.