The minimum wage debate that has continued to be experienced in Nigeria often reflects a gross lack of touch with reality by politicians. The minimum wage is, instead of being a figure based on the cost-of-living data or productivity, and sometimes even inflation, a political figure, and it is bargained to meet the optics and not necessarily raise the Nigerian worker.
To a large number of Nigerians, the prevailing minimum wage presents the maximum pain. One more glance at what it is capable of actually purchasing housing, transportation, and foodstuffs of basic quality will provide a grim truth: it is nowhere close to offering a basic dignified life.
This bare fact highlights the distinction between a survival wage, which our present system is offering, and a living wage. The difference in the policy is tremendous; a survival wage will ensure that people have just made ends meet, and a living wage will enable one to live a decent lifestyle, with all necessities and some level of economic comfort.
To make this even more difficult is the problem of delayed adjustment of wages. The wage reviews in Nigeria are usually too late, and by the time the reviews are put in place, inflation has already decreased the purchasing power, making any increment proposed symbolic. This loop keeps the reforms in a never-ending cycle of chasing the ever-increasing costs and failing to keep up with them.
Improperly structured wage increments are hardly capable of providing the desired relief. Rather, they tend to push the costs back onto the same workers that they are trying to assist in the form of higher inflation or unemployment or by forcing them to informalize.
When it comes to the issue of who actually pays to raise wages, there is no simple answer to the question as to whether it is the government, businesses, or workers. Although governments raise their hands on amounts, the cost of it tends to be on the state treasuries and eventually the people through financial and economic instability.
The fiscal capacity lie is a major issue. States accept wage increases they obviously cannot afford sustainably, which results in arrears that continue and deteriorate governance. This breeds a history of broken vows and dissatisfied civil servants.
The whole argument of minimum wage has been mostly focused on government workers in disregard of the existence of millions of people working in the private and informal sectors. This tunnel vision ignores such a large portion of the working population whose wages are often even lower and who have little to no say in such key negotiations.
Besides, wage bargaining is often used as a protest management technique and a response to hush the wave and not as a proactive approach to address structural income issues. Such a solution addresses the symptoms but not the cause of economic inequality and insufficiency of compensation.
Overall, any wage raise can soon be offset, unless there is a solid inflation management policy and despite the continued growth of productivity. The real wage killer is inflation, which quietly undermines the purchasing power and makes even significant increments insignificant over time. Wage adjustments will only be a stopgap measure until the larger economic situation is brought under control and productivity is truly increased.
What a Living Wage Policy Would in Fact Entail.
It takes a multidimensional approach to commit to moving past headline politics and into a long-term solution. There are a number of reforms that would be necessary in a real living wage policy:
- Transparency of Data: Wage amounts should be based on cost-of-living data that is publicly available and is factual.
- Sectoral Bargaining: Allowing wage structures to vary by industry, reflecting the distinct economic conditions, productivity levels, and cost pressures of different sectors.
- Social Protection: Normative Social Safety Nets to mitigate the economic shock.
- Cost-of-Living Indexing: The introduction of mechanisms that would automatically increase or decrease wages in proportion to the inflation to keep the purchasing power constant.
It is only such holistic reforms that will see Nigeria make the shift to an economically viable living wage and not the politically motivated minimum wage, which provides no true dignity and stability to its workers.
