New Minimum Wage Can’t Feed A Family Of Three

Nigeria’s new minimum wage of N70,000 may not be enough to feed a household of three, BusinessDay calculations have shown.

The new minimum wage represents a 133.3 percent rise from N30,000 since 2019, but it is incapable of providing food on the table of an average Nigerian family of three.

BusinessDay analysis of the National Bureau of Statistics data shows that the monthly cost of a healthy diet and transport for one person will take N60,518, which is 86.5 percent of the new wage.

This means it costs N121,036 to feed a family of two with a healthy diet and N181,554 for a family of three persons.

Oluebube Nwosu, a consumer goods analyst at Vetiva Capital, said the N70,000 is below the parity of where the last minimum wage was when it was enacted in 2019.

“It should be about N80,000 at least as the consumer price index has risen 160 percent since then,” he said.

Before the new wage was announced by President Bola Tinubu on July 18, there had been an ongoing battle between the organised labour and the Federal Government over the right minimum wage for workers.

The minimum wage negotiation was the most contentious in the history of minimum wage negotiation in Africa’s most populous nation, exacerbated by the economic reforms.

According to the International Labour Organisation, minimum wage is the minimum amount of remuneration an employer is required to pay for the work performed by an employee during a given period.

Unlike a living wage, which is a more standard and satisfactory payment, the minimum wage serves as a baseline that ensures the worker can meet their essential needs.

In April, the organised labour, comprising the Nigerian Labour Congress and Trade Union Congress, demanded N615,000 as the new monthly minimum wage for workers, an increase of 1,950 percent from N30,000.

The N615, 000, whichh was seen as unrealistic, was reduced to N497,000 and further to N494,000. However, the government only raised its national minimum wage offer from N57,000 to N60,000.

Then last week, the offer increased from N62,000 to N70,000. The labour unions accepted the new wage with the condition that it will be reviewed after three years.

The new wage Is not a living wage, given the current economic realities stemming from the reforms of the Bola Tinubu administration, said Tobi Ehinmosan, macroeconomic and fixed income research analyst at FBNQuest Merchant Bank.

“Prices are fast accelerating and stretching consumers’ wallets. While the upward review of the minimum will ease the disposable income of households, the soaring prices of goods and services means that individuals can’t afford necessities. Then, we have higher fuel prices, which translate to higher transportation costs and the increase in electricity tariffs,” he said.

Ehinmosan noted that despite the increase, the wage can’t keep pace with the rising cost of living.

“What the government can do is to stabilise the exchange rate, tackle insecurity, implement policies and reforms that will act as economic shocks to the grappling costs faced by the average Nigerian,” he added.

Further analysis shows that the N70,000 is still the lowest among the top 10 African economies.

Nigeria, home to the largest population of youth in the world, has experienced two recessions in the past eight years, which have weakened consumers’ purchasing power and thrown millions into poverty.

Inflation rate in the country has accelerated to a record high, largely on the back of government reforms via the removal of petrol subsidy and naira devaluation.

The headline Inflation quickened for the 17th straight time to 33.95 percent in June, up from 34.19 percent in May, according to the NBS. Food inflation, which constitutes more than 50 percent of headline inflation, also increased to 40.53 percent from 40 percent.

Ebunoluwa Adeleke, a Lagos-based mother of three, told BusinessDay that rising prices of food items such as rice, oil, and pepper have made her reduce the quantity of food that she sells.

“My husband works at Lagos Island and he comes home only on weekends or at the end of the month. The little money we get is what we use in paying school fees and feeding. We have been eating well because I sell food but not as often as before. Sometimes, I get the opportunity to clean people’s apartments in the evening and get paid. That’s another source of income,” she said.

According to the International Labour Organisation, labour productivity is an important economic indicator that is closely linked to economic growth, competitiveness, and living standards within an economy.

Nigeria’s labour productivity in terms of the gross domestic product (GDP) per hour worked was $7 last year, lower than its African peers such as Gabon ($26), Botswana ($21) South Africa ($21), Egypt ($20) and Algeria ($19).

Charis Edward, an Ogun-based trader, said the high price of food has become unbearable for his family.