Explaining the Nigerian minimum wage strike

Between May 31st and June 1st, 2024, the Nigeria Labour Congress (NLC) sent a letter to various unions announcing a nationwide strike scheduled for June 3rd. On June 3rd, the strike took place, prompting negotiations between the NLC and the Nigerian government.

1. Economic Conditions: The NLC has cited the high cost of living, inflation, and the devaluation of the naira as primary reasons for demanding an increase in the minimum wage. They argued that the current minimum wage of ₦30,000 is grossly inadequate to meet the basic needs of Nigerian workers. The NLC has repeatedly said that the current minimum wage is not a “living wage.” See table below.

Table 1. Minimum Wage Comparison 2015 - 2024. Source: Channels

2. Comparison with Other Countries: The NLC has pointed out that Nigeria’s minimum wage is significantly lower compared to other oil-exporting countries, which share similar economic conditions. See table below.

Table 2. Comparing Nigeria’s Minimum Wage to Other Oil Producing Countries in Africa. Source: Channels

3. Previous Wage Agreements: The NLC emphasized that the Federal Government had previously agreed to a temporary wage increment of ₦35,000 as a palliative measure following the removal of fuel subsidies, but the implementation has been inconsistent.

1. Financial Constraints: The government has argued that the demand for a minimum wage of ₦615,000 by the NLC is unrealistic given Nigeria's current economic challenges, including high national debt and fiscal deficits. According to the Debt Management Office (DMO), Nigeria’s public debt stood at US$108 billion as at the end of 2023.

2. Incremental Approach: President Tinubu's administration has proposed a more modest increase in the range of ₦60,000 to ₦70,000, which they believe is more sustainable given the current economic conditions.

3. Provisional Measures: To temporarily alleviate workers' hardship, the government approved a provisional wage increment of ₦35,000 for federal workers starting in September 2023.

Before we discuss the June 3rd negotiations between the NLC and the Federal government, it is important to highlight some important context. It is important to remember that as of 2020, the Integrated Payroll and Personnel Information System (IPPIS) only processed the salaries of about 1.1 million workers across 696 Ministries, Departments and Agencies (MDAs). The Federal Civil Service Personnel accounted for 720,000 workers. Compared to 2014, that is an increase of 23% when the IPPIS paid the salary of only 257,516 Employees.

Moreso, it is important to state that Nigeria’s personnel cost has only been increasing year-on-year (YoY). As can be seen from the image below, in the 2024 budget, Nigeria’s personnel cost was about 7 trillion naira, with salaries and wages expensing about 4 trillion, whilst allowances accounted for 2 trillion. In the 2023 budget, Nigeria's personnel cost was about 5.9 trillion naira, with salaries and wages expensing about 3 trillion naira, whilst allowances accounted for 1.6 trillion naira. In the 2022 budget, Nigeria’s personnel cost was about 5 trillion naira, with salaries and wages expensing around 2.5 trillion naira, whilst allowances accounted for 1.7 trillion naira.

Figure 1. Nigerian Government Personnel Costs 2022 - 2024. Source: BudgIT

Despite this, one of the major areas of concerns by the NLC is the fact that the National Assembly’s (NASS) budget tends to seem bloated relative to the conditions of the country. That is, NLC members tend to argue that reducing NASS budget can, as can be seen in the tables below, help fund the minimum wage increase.

Table 4. Comparing Nigeria’s Minimum Wage to the National Assembly Budget. Source: Stati Sense

Table 5. Breakdown of a Nigerian Senator’s Salary. Source: BudgIT

Table 6. Breakdown of Salary of Senators around the World. Source: BudgIT

Before the June 3rd strike, Talks between the National Minimum Wage (NMW) committee and labor unions broke down, leading unions to walk away from negotiations. In response, the National Assembly stepped in on June 2nd, 2024. To emphasize their demands, organized labor called a nationwide strike for June 3rd. In the national interest, the Federal Government met with union representatives on June 3rd at the office of the Secretary to the Government, aiming to resolve the strike.

Following extensive discussions and collaboration, both parties agreed to the following resolutions:

1. The President's Commitment: The President of the Federal Republic of Nigeria is committed to a National Minimum Wage exceeding N60,000.

2. Tripartite Committee Meetings: In light of the above commitment, the Tripartite Committee will convene daily for the next week to determine a mutually acceptable National Minimum Wage.

3. Union Response: In recognition of the President's commitment (outlined in point 1), organized labor will hold an immediate meeting with its internal bodies to discuss this development.

4. No Retaliation: There will be no victimisation of any worker as a result of the recent industrial action.

As at the publication of this newsletter, the negotiations are still ongoing.