Nigeria’s minimum wage system could be in for a significant overhaul, with a proposal to move away from the current monthly structure and implement an hourly minimum wage tied to worker productivity.
Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, who spoke about the potential changes in a recent interview with Channels TV announced the proposal.
From Monthly to Hourly
The current minimum wage in Nigeria is a fixed monthly amount, set at ₦30,000 since 2019. However, Oyedele argues that this approach might not be the most effective.
“My view is that we need to use this opportunity of minimum wage to have a rethink about our minimum wage structure,” Oyedele stated.
He proposes a transition to an hourly minimum wage, which he believes would be a more accurate reflection of the time and effort workers put in.
Benefits
This shift could have several benefits. Firstly, it could provide greater flexibility for both employers and employees. Businesses might be more open to hiring part-time workers, and workers would have the option to take on additional hourly jobs to supplement their income.
Secondly, an hourly system could potentially reduce underemployment, a significant issue in Nigeria. Many Nigerians are willing and able to work more than their current positions allow. An hourly minimum wage could incentivize businesses to offer more short-term or project-based work opportunities.
Linking Minimum Wage to Productivity
Beyond the shift to an hourly system, Oyedele also proposes linking the minimum wage directly to worker productivity.
“There should also be conversations around measurable productivity,” Oyedele emphasized. He suggests establishing clear productivity standards that would directly impact the minimum wage an employee receives.
The rationale behind this proposal is that minimum wage increases should be tied to an actual increase in output. Without a focus on productivity, Oyedele argues that even substantial minimum wage hikes would quickly lose their value due to inflation.
“Imagine for instance if you’re able to measure the productivity of civil servants on behalf of government,”
“And we have a structure that says the government cannot pay you a minimum wage that is less than the productivity that you have. What that will do for all of us is that civil servants will then start focusing on productivity because it drives their minimum wage.”
This focus on productivity could have a significant impact on the overall efficiency and effectiveness of the Nigerian workforce. By directly linking wages to output, workers would be incentivized to improve their performance, potentially leading to increased economic growth.
Loosening Restrictions on Civil Service Workers
In addition to the minimum wage proposals, Oyedele also suggested relaxing restrictions on civil servants engaging in other forms of employment. Currently, civil servants are generally only allowed to participate in farming activities alongside their government jobs.
Oyedele argues that civil servants with relevant skills and expertise should be permitted to take on additional work in their fields, as long as it does not interfere with their primary duties. This could potentially allow them to supplement their income and contribute their skills to the private sector.
However, Oyedele emphasizes the importance of safeguards to prevent conflicts of interest. “You should be able to do more than one job provided that there’s no conflict and you can give the minimum hours to the government,” he said.
Concerns and Challenges
While the idea of an hourly minimum wage presents potential advantages, there are also challenges to consider. One concern is the potential for exploitation. Without proper regulations in place, employers might attempt to reduce full-time positions into multiple part-time roles to avoid paying benefits or offering job security.
Another challenge is ensuring a fair and consistent method for tracking and measuring work hours across diverse industries. The current system, with a fixed monthly minimum wage, offers relative simplicity. Transitioning to an hourly system would require the development of robust mechanisms to monitor and document working hours accurately.
If You Ask Me
The proposals put forward by Oyedele represent a potentially significant shift in how Nigeria approaches minimum wage and worker productivity. While the ideas hold promise, further discussion and analysis are necessary before implementation.
Public discourse involving stakeholders like labor unions, business leaders, economists, and civil servants would be crucial in shaping any potential policy changes. Careful consideration would need to be given to the potential benefits and drawbacks, as well as the development of robust regulatory frameworks to ensure fair and effective implementation.
This includes careful consideration of issues like the logistics of transitioning to an hourly system, establishing clear guidelines for civil servant moonlighting, and developing reliable productivity measurement tools.
Ultimately, the goal should be to establish a minimum wage system that fosters worker well-being, incentivizes productivity, and contributes to the overall economic growth of Nigeria.
