It is no longer news that Ogun State Governor, Prince Dapo Abiodun, has graciously approved the new minimum wage for the state workers. What is spectacularly cheering about the news is his approval of the highest amount offered by any government in the country. It is like a case of the proverbial patient dog eating the fattest bone. Yes, it’s been a long wait, but the outcome of the prolonged negotiation is worth more than the patience invested in the dialogue.
At the end of the meeting between the state team led by the Secretary to the State Government (SSG), Mr. Tokunbo Talabi, and the leadership of the Organized Labour, including the Nigeria Labour Congress (NLC), Trade Union Congress (TUC), and the Joint Negotiating Council (JNC), Abiodun approved N77,000 as new Minimum Wage for the least paid worker in the state. This is far and above the threshold of N70,000 approved by the Federal Government. And it takes immediate effect.
With this noble decision, Ogun State workers will now enjoy a new lease of life commencing from the end of October. Since the advent of the present regime of oil subsidy removal, salary earners in the country have experienced progressive erosion of their disposable incomes as key players in the oil sector routinely increase the pump price of the PMS (aka petrol) and other auxiliary products. Apart from that, the rising food inflation and incessant hikes in transportation costs have also taken a better part of their take-home pay. Therefore, the decision by the Abiodun administration to go beyond the benchmark of N70,000 minimum wage is a clear testament to his avowed commitment to improving the welfare of the workers in the state.
In intent and purpose, the gesture is more than a mere presentation of figures. Rather, it is a determined effort to ameliorate the hardship confronting the people under the present economic realities. The current food scarcity and the attendant inflationary trend have been linked to the reform initiatives of President Bola Ahmed Tinubu aimed at repositioning the battered economy. According to the National Bureau of Statistics (NBS) report, the inflationary pressures remain driven by currency depreciation, low agricultural production occasioned by insecurity, high input costs, increase in energy costs, and the rising cost of imported food inflation put at 40.9 percent in May this year. Tough as it is, the IMF has confirmed that the reform policy is the only option available to the government in the present circumstances. So, all that is required to enjoy the long-term benefits of the burden of sacrifice by ordinary people is to be more patient with the administration to take the economy out of the woods.
However, as a responsive government, the Abiodun administration has factored in all of these challenges into its decision to approve N77,000 as the new minimum wage for state workers. In doing so, the belief is that it will have a trickle-down effect on the generality of the citizenry. This is particularly more so under the entrenched culture of shared poverty where the meagre income of a worker is thinly spread among a huge number of people. Traditionally, because the government is the largest employer of labour, every single worker is seen as a common treasury to care for a long wagon of relatives, aged parents, uncles, aunties et cetera.
To this extent, the approval of the new minimum wage above the national threshold will go a long way to boost the social safety net to take care of the vulnerable in society. Its multiplier effects will also help to re-inflate the economy.
Since he assumed the saddle of leadership in the state, Prince Abiodun has always placed a high premium on the welfare of the state workers, seeing them as part and parcel of the collective vision to transform the economy of the state into a sustainable industrial hub and preferred investment destination of choice in Nigeria and the West Africa sub-region. Once again, he has walked the talk by approving the sum of N77,000 as the minimum wage for the lowest paid worker in the state with the payment taking immediate effect.
The governor, who spoke through the SSG, said that no worker in the state should earn less than the approved amount, starting from October.
Prince Abiodun said his administration meant well for the people of the state and had proactively taken steps to ameliorate the suffering of the people.
The governor noted the economic realities in the country and deliberately took steps to improve the living standards of the people in the state holistically. He further promised to engage the private sector and other relevant stakeholders to ensure that every salary earner enjoys commensurate minimum wage. He said he would set up a monitoring team to see how it would be implemented by the private sector to ensure that no one is short-changed.
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On his part, the State NLC Chairman, Comrade Hameed Benco, said the organized labour in the state was pleased with the Governor for approving the highest minimum wage in the country, following due consultation with labour leaders. He also commended the administration for graciously approving the submission of labour that the new basic salary should not be taxed.
Similarly, his counterparts in the TUC and JNC, Comrade Akeem Lasisi, and Comrade Isa Olude respectively, applauded the government for being worker-friendly, adding that consequential adjustments for pensioners and other matters would be announced after due consultation with the relevant stakeholders.
In his reaction, Ogun State Head of Service (HoS), Mr. Kehinde Onasanya, said the approval of the generous minimum wage for workers underscores the responsiveness and sensitivity of the Governor and the government to the plight of the workers and the general populace of the state. Onasanya expressed optimism that the gestures would further boost the workers’ morale by committing themselves to implementing the government’s policies.
Ogun State is one of the few states that have approved the new minimum wage for its workers, while others are still dilly-dalling over the agreed amount to be paid. Some governors have even said they will not be able to pay because they don’t have the financial capacity to foot the bills. The old minimum wage of N30,000 signed into law in 2019 by former President Muhammadu Buhari officially expired in April 2024. However, it is worth noting that many states have not been able to pay the previous minimum wage. A report by the Nigeria Labour Congress (NLC) showed that 15 states have yet to implement the N30,000 minimum wage of 2019, while the private sector is contending with multiple taxes, high energy costs, and steep recurrent expenditure.
Some public affairs analysts have blamed the failure on a lack of political will on the part of the concerned governors to prioritise the welfare of their states’ workers. Yet, the outlook of the economy in the months ahead reveals that the headline inflation rate is expected to remain elevated. This is because the monetary policy of the Federal Government is likely to remain restrictive in the coming months, especially if the current inflation rates do not buck their upward trends.
An earlier report by the Nigeria Governors’ Forum (NGF) had warned that if wages were increased by 50 percent, 13 states would go bankrupt. By implication, many states will be incapable of financing the new minimum wage of N70,000. So far, only 16 out 36 state governors have set up committees to work out the modalities for the implementation of the N70,000 new Minimum Wage. The Federal Government, on its part, commenced payment of the new minimum wage to its 1.2 million workers in September. Workers in other states are still contending with the waiting game.
There is a sense in which the capacity of the Ogun State government to rise above the waters is seen as part of the outcome of the sustained economic growth occasioned by the creation of an enabling environment for investments through infrastructure development, land reform as well as enhanced Easy-of-Doing-Business, culminating in an increased revenue generating capacity. As the recent report conducted by Economic Confidential, measuring the internal revenue generating (IGR) capacity of each state as a percentage of Federal allocation shows, Ogun State is on the front roll. Put on a higher pedestal, the administration now has a comparatively limited need to depend on federally allocated revenue for its operations.
On the other hand, there is a wide range of implications for the poorly performing states. What it means is that they will only depend on federal allocation to survive because of their comparatively low capacity for internally generated revenue (IGR). Secondly, they will have less revenue left to implement the capital expenditure components of their budgets, thus facing a greater risk of resorting to more borrowing or under-implementing their capital budgets. Worse than that, they offer no attraction for investment that could lead to economic growth.
For being able to engineer sustainable economic prosperity for Ogun State, the Governor walks tall on the new minimum wage implementation.
Ogbonnikan writes from Abeokuta, Ogun State capital.
