Minimum wage grossly inadequate, Nigerians lament

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Nigeria’s minimum wage cannot cater for the minimum nutritional needs of one adult person in a month, a new report by Picodi, an international e-commerce company has found. NIYI JACOBS, reports

Picodi published a report on Friday, said the value of basic food products for the healthy living of an adult in a month, at the beginning of 2022, stood at N40,980, higher than the N30,000 minimum wage in Nigeria. This represents a 15.89 per cent increase compared to the beginning of 2021.

The study created a contractual list of basic food products and compared the prices of these products with the minimum wage. The list consists of eight product groups: bread, milk, eggs, rice, cheese, meat, fruits and vegetables.

The Nigerian minimum wage is thus not sufficient to meet the minimum nutrient requirements of the average adult based on those basic products.

Picodi researchers checked how the minimum wage rates have changed in 64 countries and whether such amounts can ensure a minimum standard of living in a given country.

They concluded that basic food sufficient to meet the minimum nutrient requirements is worth 136.6 per cent of the minimum wage in Nigeria, the worst rate among the 64 countries.

On the contrary, a year ago, these products were worth 117.9 per cent of the 2021 minimum wage in Nigeria.

This, in effect means, the prices have risen faster than the minimum wage.

Record increase in wages

The study covered 64 countries with a government-set minimum wage. The scope of the countries cut across Europe, North and South America, Africa, Asia and Australia.

These countries differ in the tax rate, the report noted. “In several countries, like Japan, Philippines and Nigeria, a person earning the minimum national wage is exempt from income tax and contributions. While in other countries the difference between gross and net income may be up to several dozen percent.”

For this reason, Picodi said the list only includes net amounts, that is money that the employee actually receives in cash or on his bank account.

In 10 out of the 64 countries covered, the minimum wage rates have not changed compared to the preceding year, the report said. “These include Armenia, Hong Kong, Israel, Malaysia, Nigeria, Slovenia, Philippines, Thailand, Vietnam and Peru.”

It said the highest increase in the minimum wage was recorded in Montenegro, a Balkan country neighbouring Serbia. This is as a result of, among others, favourable tax changes. The country increased its minimum wage by 102 per cent at the beginning of 2022.

Argentina is second with a net up 55.4 per cent; Turkey, 50.5 per cent; Kazakhstan, 40.9 per cent; Saudi Arabia, 33.3 per cent and Hungary, 54.2 per cent.

Nigeria came in 55th place in this ranking. And the country’s minimum wage did not change as of the time of filing this report.

Methodology and data sources

The researchers compared the monthly minimum wage for full-time work in January 2022 with wages from January 2021.

They depended on data from official government websites, relevant ministries or committees. “We have omitted countries where the minimum wage is negotiated by individual trade unions and where there is no statutory minimum wage (such as Switzerland, Italy, Singapore and northern European countries),”

“For countries where the minimum wage differs by region (USA, Philippines, Thailand, Vietnam), we calculated and used the arithmetic mean of all regions. We obtained the net amounts using local salary calculators,” the report stated.

It further noted that the set of products used in this study is a contractual list of basic food products, created for statistical purposes only.

“The amounts given have been calculated based on recommendations of some health ministries regarding the minimum standards of food consumption. The prices of the contractual food products come from the portal numbeo.com, where consumers around the world monitor the prices of food and other products and services.”

As for the local currencies, Picodi converted them using the average Google Finance exchange rate for the fourth quarter of 2021.

Countries you can live off the minimum wage

Since food preferences and perceptions of a comfortable life vary from region to region, and even from person to person, the organisation said it compared the prices of basic food products with the minimum wages to see how much of the minimum income a person has to spend on necessary products.

“The top countries in this ranking are the United Kingdom, Ireland and Australia: the ratio of basic products to the minimum wage ranges from 6.6 per cent to 7.3 per cent.

“The situation of minimum wage earners in Russia, Kazakhstan or India is not easy: in these countries, the minimum cost of basic food products consumes about half of their salary,” the report said.

But, Nigeria, the largest economy in Africa was placed last out of 64 countries with a result of 136.6 per cent. This means that the minimum wage is not even enough for a modest basket of basic food products, Picodi said.

Minimum wage in Nigeria

In April 2019, Nigerian leader, Muhammadu Buhari signed a new minimum wage bill. The law ushered in a new pay structure for Nigerian workers with the federal government commencing implementation almost immediately.

The bill “makes it compulsory for all employers of labour in Nigeria to pay their workers the sum of N30,000.”

Some state governors opposed the N30,000 minimum wage with many of them saying they will be unable to pay their workers. While other private entities are yet to implement the law.

The bill, however, excluded persons who are employing less than 25 workers, persons who work in a ship that sails out of Nigeria’s jurisdiction and other persons who are in other kinds of regulated employment which are accepted by the Act.

But, it “gives workers the right if you are compelled by any circumstance to accept a salary that is less than N30, 000 to sue your employer to recover the balance.”

It also authorises the minister of labour and any person nominated by the minister or any person designated by the minister of labour in any ministry, department or agency to, on your behalf, take action in your name against such employer to recover the balance of your wages.

Despite the law, however, many state governments and many local governments still pay the old N18,000 minimum wage.

Rising Inflation

Nigeria’s inflation rate continues to rise while the minimum wage has not improved.

On Monday, the National Bureau of Statistics said the country’s inflation rose to 15.63 per cent in December 2021 compared to 15.40 per cent in November.

The statistics office said prices of goods and services, measured by the Consumer Price Index, increased by 15.63 per cent in December 2021 when compared to the previous year.

The NBS said food inflation, which is the composite food index, rose by 17.37 per cent in December 2021, down by 2.19 per cent points when compared to 19.56 per cent in December 2020.