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If the demand for an increase in minimum wage is eventually
approved by the Federal Government, over N2.31tn would be paid as
salaries to the over one million workers on the payroll of the Federal
Government, investigations have revealed.
Figures obtained from the Budget Office of the Federation show that
the Federal Government is planning to make a proposal of N2.31tn as
personal costs for workers on the payroll.
The N2.31tn figure is contained in the 2019 Budget Call Circular,
which was obtained from the Budget Office of the Federation by a Punch
correspondent.
The Budget Call Circular signed by the Minister of Budget and
National Planning, Senator Udo Udoma, sets out the requirements and
instructions that must be met and followed in the preparation of the
2019 Federal Government budget proposal.
A breakdown of the N2.31tn personal costs provisions shows that
about N2.148tn is being proposed for the payment of salaries of workers
in the Ministries, Departments and Agencies of government.
Similarly, a budgetary amount of N160.5bn is to be earmarked to pay the salaries of workers in the government-owned enterprises.
There are about 950 MDAs of government having about 1.5 million
workers, according to top government officials with knowledge of the
Integrated Personnel Payroll Information System.
It was learnt that while the financial implications of the proposed
wage increase might not have been fully determined, whatever
adjustments that would be made could be captured through a supplementary
budget after the main budget had been presented to the National
Assembly later this month.
A top official of government in the Budget Office told a Punch
correspondent that the exact amount needed to implement the wage
adjustment could not be determined immediately as no specific amount had
been agreed upon.
The official, who spoke on condition of anonymity because he was
not officially permitted to talk on the matter, said since the issue was
still being discussed at the highest level of government, the wage bill
could be higher than the N2.3tn that was budgeted for.
He said, “The process of preparation of the 2019 budget has
reached an advanced stage. Already, the Federal Executive Council has
approved the Medium Term Expenditure Framework, and based on what was
approved, the wage bill is over N2tn and from all indications, it didn’t
capture the proposed minimum wage.
“So, we will have to send the main budget to the parliament and
wait for the outcome of how much government would announce as minimum
wage.
“Once that is done, a supplementary budget would have to be prepared to capture the wage adjustment.”
Commenting on the wage increase, some finance and economic experts
on Saturday said the Nigerian economy had adequate capacity to absorb
the demand for an increase in minimum wage.
They said the current minimum wage was too low to boost the level of consumer demand that would stimulate the economy.
Those that spoke to a correspondent are a former Managing Director,
Unity Bank Plc, Mr Rislanudeen Mohammed, and the Head, Department of
Finance, Nasarawa State University, Prof. Uche Uwaleke.
Uwaleke dismissed fears that the increase in minimum wage would
have negative impact on consumer demand, noting that the economy had
capacity to cushion the level of inflationary pressure that might arise
from the wage increase.
While admitting that the wage increase would cause immediate rise
in inflation, he said this would normalise in the medium to long term.
He said, “The economy has enough capacity to absorb the
increase in minimum wage because you are talking about a population of
1.5 million out of about 200 million people.
“The government sector is very small compared to the total
labour force and even though it is expected to extend to the private
sector, it is the informal sector that employs the bulk of the labour
force.
“We need a living wage to be able to reflect on the economy.
Part of why the economy went into recession was because of weak
aggregate demand on account of the fact that states were not paying
salaries caused by revenue shortfall.”
Uwaleke said as the economy had just exited recession with
inflation at 11.2 per cent, there was enough capacity to absorb the
increase in wage bill.
Mohammed said there must be a lot of cut-cutting measures in the
areas of recurrent expenditure for government to be able to pay the
minimum wage.
He said, “If recurrent expenditure is reduced and allowances of
public officials are also reduced, then the ability to pay may be
enhanced but it’s still not enough. There must be a lot of cut-cutting
measures in the area of recurrent (expenditure) for government to be
able to pay some part of the N30,000 minimum wage. Even if the Federal
Government pays, 80 per cent of state governments would not be able to
pay that amount.”