Deregulation of the national minimum wage: pros and cons

Since the federal government signed the wage bill into law in the year 2009 there has been a centralized wage structure for the civil service of the federation. The federal government had continually urged states to improve their salary structure so as to meet the new minimum wage.

In this write-up the minimum wage refers to the amount of #18000 that is minimum salary a worker in the Nigerian civil service is expected to be paid either at the state or federal level.

As with Nigeria where a lot of things goes wrong, since the signing of this bill into law only a small number of the states have actually complied with this legislation. In a country where the official price of kerosene is #50 per litre and possibly only the president’s wife could get the commodity at that price while kerosene regularly sells for between #100 to #200per litre, you should not be too surprised. The state are not exactly too much at fault as most of them cannot possibly pay their workers at that price. This then brings to our mind a question we’ll like to ask:

·         Why did the federal government agree on a minimum wage when it knew that individual state would clearly not be able to pay.(considering that this has cost the states billions of naira in respect of industrial actions from the workers that try to demand the implementation of the minimum wage as they view this as their entitlement)

To correct this initial mistake the government at the centre is looking to pass into law another bill that would allow the states to negotiate the terms of pay with their workers on their own terms.

There are many plausible reasons why intellectuals would support the deregulation of the minimum wage, the first being that all states of the federation do not have equal financial capabilities and so for instance it might be possible for Lagos or Rivers to pay #18000 minimum wage other poorer states might not be able to pay. In Nigeria most states depend on the federal allocation to survive and the quota for sharing federal allocation in Nigeria doesn’t favour the weak states. Rather it’s the richest states that get more share of the money.

Another reason is not far-fetched as we have witness times without number, the fact that there is a set minimum wage actually impoverishes the poor states as the civil servants in the states usually embark on industrial actions to demand that their state government increase their salary to meet up with the ‘’minimum wage’’ and making the states lose precious money to Industrial actions.

But is that all there is to the argument? On the other side there are those of the view that the minimum wage is the only thing helps to regulate and check the activities of governors that might try to take advantage of its civil servants. Since corruption is so widespread in Nigeria it won’t be hard to find states governors that would do just that if the minimum wage is deregulated.

Another side of the coin is that it might reduce the power of the labour unions. It would surely reduce the power of unions in the country to collectively bargain for things from the government as there would be so much disparity among the pay of the labour force across the country.

In the middle of all these talk to deregulate the minimum wage, we must look for alternatives. One of such is to try to reduce disparity among the federal allocation shared to the states or better still the money should be shared while paying regard to population of each state as the money is the ultimate make or break for the states to determine if they can afford to pay the minimum wage or not.