President Bola Tinubu recently approved a new minimum wage of ₦70,000 for Nigerian workers and committed to reviewing the national minimum wage law every three years. However, this decision has raised concerns among the Organised Private Sector of Nigeria (OPSN) regarding their capacity to meet the new financial obligations due to high production costs.
**Concerns from the Organised Private Sector:**
– **Affordability:** The OPSN, represented by Mr. Adewale-Smatt Oyerinde, Director-General of the Nigeria Employers’ Consultative Association (NECA), expressed doubts about their ability to sustain the new minimum wage.
– **Production Costs:** Private businesses are currently burdened by high production costs, making it challenging to accommodate the wage increase.
**Recommendations and Requests:**
– **Government Support:** The NECA Director-General praised the federal government for approving the new wage but emphasized the need for reforms to help the private sector cope with this new expense.
– **Economic Burden:** During discussions with the National Minimum Wage Committee, the OPS raised concerns about affording even the previously proposed ₦62,000 wage.
– **Proposed Reforms:** To alleviate the economic burden, the OPSN called for several measures:
– **Electricity Tariff Reversal:** Reversing the recent increase in electricity tariffs.
– **Central Bank Action:** Ensuring the Central Bank of Nigeria redeems all pending forwards for companies in the productive sector.
– **Tax Freeze:** Imposing a five-year freeze on new taxes and levies for businesses.
– **Duty Exemption and Subsidy:** Granting duty exemptions on imported conversion kits and providing government subsidies for their purchase.
**Fundamental Consideration:**
– **Ability to Pay:** The ability of businesses to pay the new minimum wage remains a critical issue. Immediate announcements and clear support from the government are essential for businesses to plan effectively and accommodate the new wage structure.
The OPSN’s concerns highlight the need for a balanced approach to wage increases, ensuring that both workers receive fair compensation and businesses remain viable in a challenging economic environment.