For a proposed ₦62,000 NMW: Only 9 states will meet payroll on their IGR alone

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June 11, 2024

The Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) have embarked on many strikes over the years for one major reason — increasing the minimum wage of people in the Nigerian Civil Service.

The current minimum wage of ₦30,000 (≈ $20.01) — an increase from ₦18,000 — took effect in 2019.

On June 3, 2024, the NLC embarked on an indefinite strike. As with most past strike actions, one of the demands was an upward review of the National Minimum Wage (NMW).

Less than 24 hours into the strike, both unions reached a resolution with the representatives of the government. They accepted President Bola Ahmed Tinubu's commitment to a new NMW higher than ₦60,000, which put the least possible NMW at ₦60,001 (≈ $40.01).

The Tripartite Committee in charge of the new figure came up with ₦62,000 (≈$41.06) to be recommended to the president.

How much does the average Nigerian need monthly

The NLC's initial demand was ₦615,000 (≈$411.04), a 1,950% increase from the current minimum wage.

As of April 2024, inflation in Nigeria was at 31.7%, the 13th highest rate in the world. Twenty-four hours into the presidency of President Tinubu, the pump price of petroleum more than tripled as a result of the subsidy removal; the naira also started experiencing significant loss against the US dollar. These factors contributed to an increased cost of living for Nigerians.

Let's justify the need for an increased NMW, looking at some items that make up the cost of living for an average Nigerian.

A breakdown of the average monthly costs for two essential expenses (healthy meals and transportation) in selected Nigerian states shows that in Lagos, a person needs around ₦135k per month for food and transport. In Abuja, the monthly cost is about ₦113.3k. Even people in states with lower costs of living like Adamawa (₦80.3k) require more than the current minimum wage of ₦30,000. This disparity highlights the urgent need for a significant increase in Nigeria's minimum wage to ensure that citizens can cover their basic living expenses.

Can your state really afford an assumed ₦60,001?

There is no official number of employees in the Nigerian civil service other than 1.2m, with 720,000 in the Federal Civil Service. We are using the projected 2022 population to distribute the remaining 480,000 civil servants among states to determine the state government's ability to pay the minimum wage.

Right now, the average salary of civil servants is between ₦99,615 (≈$66.43) and ₦128,614 (≈$85.76). However, the lowest is ₦30,000 and the highest is ₦517,953.

The proposed minimum wage of ₦62,000 will put the average salary between ₦205,873 (≈$136.35) and ₦551,550 (≈$365.30). The lowest is ₦62,000 and the highest is approximately ₦2.1m (≈$1,392.33).

With this proposed NMW, only 7 states would be able to use less than 50% of their monthly income (federal allocation and IGR) to pay their employees, with only Nasarawa unable to meet payroll as the proposed salary is more than its revenue by 31%.

It gets worse when the proposed NMW is compared to only states' inferred IGR for 2023 — only nine states will be able to meet payroll with their IGR alone.

In both cases, Lagos, Ogun, and Rivers States will spend a small share of their income to pay salaries.

Methodology

The cost of two healthy meals was calculated using the National Bureau of Statistics Cost of a Healthy Diet (CoHD) April report.

Transport fare was calculated using the average cost of bus transport per trip in each state, sourced from the National Bureau of Statistics Transport Fare Watch.

The average monthly rent was sourced from propertpro.ng and calculated using the average annual rent in each state.

The total revenue for the states in 2023 was inferred using the 2022 figures because there are currently no records of states IGR for the year. The only available data for 2023 was the income from the Federal Account Allocation Committee (FAAC). State populations were also used to infer the number of civil servants per state as there were also no figures for this.

With no official breakdown of civil servants in the country by their levels, using the average definitely skews the result because of a few outliers. For example, while the least NMW right now is ₦30,000, the highest earning is ₦517,953. Also, 55% the salaries of all levels and steps in the Consolidated Public Service Salary Structure using the current NMW is below one million naira yearly.

Yinka Awosanya contributed to this article.

Author:

Abiodun Adenle
Research | Data Analyst
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