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Nigerian wage dispute drags on amid profligate state spending and worsening economic indices

Nigerian wage dispute drags on amid profligate state spending and worsening economic indices
A girl walks on a gas pipeline running through Okrika community near Nigeria’s oil hub city of Port Harcourt December 4, 2012. Despite billions of dollars worth of oil flowing out of Nigeria South East, life for the majority of Niger Delta’s inhabitants remains unchanged. Most people live in modest iron-roofed shacks, and rely on farming or fishing, their only interaction with the oil industry being when they step over pipelines in the swamps – or when a spill blights their landscape. Picture taken December 4, 2012. (Photo: REUTERS / Akintunde Akinleye)
Uche Igwe
By Uche Igwe
20 Jun 2024
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The dispute between labour unions and the Nigerian government has been lingering for weeks. Although an agreement is likely, the country still faces harsh economic conditions.

On 3 June 2024, Nigerians woke up to deserted roads and barricades with flags of labour unions flying and members chanting solidarity songs. The Nigeria Labour Congress, the umbrella organisation of workers, had embarked on industrial action to demand an increase of their minimum wage.

The development was not completely surprising as the action took place after negotiations with the government broke down. The exercise disrupted economic activities, including the shutdown of all domestic and international flights, which resulted in thousands of passengers being stranded across the country.

The striking workers shut down the national grid for more than 24 hours, throwing the country into utter darkness and without electricity. Media reports indicate an estimated 149 billion naira ($97-million) was lost in one day, while cargo agents alone insist they lost 7 billion naira ($4.5-million) due to the strike action.

Minimum wage versus living wage


The debate is whether Nigerian workers will get the government to pay them a wage that can serve beyond the minimum as a living wage. The unions currently demand that their monthly wages be increased from 30,000 naira ($20) to 500,000 naira ($336), an increase of about 1,500%.

The last time the minimum wage of workers was reviewed was in 2019. It was raised to 30,000 naira per month, which was then equivalent to $83. As part of the ongoing negotiations, the government has already offered to pay at least 60,000 naira and later upped this to 62,000.  

Nigeria A customer pays for goods at a store in Lagos, Nigeria, on 17 July 2023. Nigeria's monthly inflation rate soared to a seven-year high in June, after President Bola Tinubu scrapped fuel subsidies and allowed the currency to weaken before declaring a state of emergency to control staple food costs. (Photo: Benson Ibeabuchi / Bloomberg via Getty Images)



However, the state governors have opposed the offer, insisting it is too high and unsustainable. The removal of subsidies on fuel and electricity tariffs has increased the cost of living. Continuing insecurity, recurrent clashes between farmers and herders, banditry and kidnapping have made farmlands inaccessible. As a result, food inflation has risen to an all-time high.

Government profligacy fuelling discontent among workers


The reason workers are not paid well in Nigeria is not because of a lack of resources. The country is still Africa’s second-largest oil producer, next to Libya. With the removal of oil subsidies, government revenue has improved.

Yet most of the resources are lavished daily on funding the extravagant lifestyle of politicians and government appointees. For instance, members of the Nigerian parliament earn one of the highest salaries in the world.

Despite the harsh living conditions under which the majority of Nigerians are living, the 2024 budget allocated almost 10 billion naira ($6.6-million) for domestic and international travel by the president and vice-president, while another 14 billion naira ($9.3-million) was allocated in the supplementary budget 2023 for the renovation of their official quarters.

Nigeria’s federal constitution allows revenue from crude oil sales, the country’s primary foreign exchange earner, to be collected centrally and distributed among federating units according to an agreed formula. While many states like Lagos and Rivers may be able to pay improved wages to their workers, others like Imo and Kogi have been struggling to pay even what was agreed since 2019.

Downsizing in the private sector will increase unemployment and deepen poverty


According to the International Labour Organization, private-sector organisations create 90% of the jobs in developing countries. In Nigeria, for instance, out of the estimated 60 million workers, only about four million belong to organised unions. This means the remaining 56 million probably work with private-sector organisations.

As negotiations continue, the Nigeria Employers’ Consultative Association has urged the panel to focus more on job creation and job security as a very high minimum wage may lead to the collapse of businesses.

Nigerian President Bola Ahmed Tinubu arrives for the Compact with Africa conference in Berlin, Germany, on 20 November 2023. The initiative aims to bring together reform-minded African countries, international organisations and bilateral partners to coordinate development agendas and discuss investments. (Photo: EPA-EFE / Hannibal Hanschke)



In the likely case of adopting an improved minimum wage, it will become a law applicable to every employer. This means private-sector operators must comply, including small and medium-scale enterprises. After surviving the Covid-19 pandemic, many of these small firms have been limping to survive.

Their situation worsened with the rising cost of doing business due to the removal of subsidies from fuel and electricity alongside a volatile exchange rate regime. Nigeria’s apex bank increased the interest rate to 24.75%, further accelerating inflation.

With a likely increment in their wage bill, these smaller firms will have to make decisions that will enable them to remain in business, including staff retrenchment. This will increase unemployment and deepen poverty, creating more desperation and discontent in the polity.  

A girl walks on a gas pipeline running through Okrika community near Nigeria’s oil hub city of Port Harcourt on 4 December 2012. Despite billions of dollars worth of oil flowing out of Nigeria South East, life for the majority of Niger Delta’s inhabitants remains unchanged. Most live in modest iron-roofed shacks, and rely on farming or fishing, their only interaction with the oil industry being when they step over pipelines in the swamps – or when a spill blights their landscape. (Photo: Reuters / Akintunde Akinleye)


End of economic woes under Tinubu is not yet in sight


Even with the potential increase in the minimum wage for Nigerian workers, the economic challenges that have plagued the country since the era of former president Muhammadu Buhari may not be resolved in the near future. Under the current leadership of President Bola Tinubu, the situation has worsened, with a series of economic policies that have imposed harsher realities on ordinary people.

There are potent fears of inflation and massive job cuts on the horizon. Deteriorating security and the high cost of basic commodities, including food, have left a majority of the citizens alarmed. Between 2020 and 2022, 21.3% of Nigeria’s population experienced hunger. According to data from the World Food Programme (WFP), about 26.5 million people across Nigeria are projected to face acute hunger in 2024.

A recent nationwide survey by the African Polling Institute revealed that 84% of respondents expressed sadness about the state of affairs in the country. The dialogue on the minimum wage must therefore be both pragmatic and inclusive to minimise unexpected consequences while addressing economic issues. DM

Dr Uche Igwe is senior political economy analyst and visiting fellow at the Firoz Lalji Institute for Africa at the London School of Economics and Political Science. He can be reached at [email protected]

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