The Kaduna state Government has announced the implementation of the 30, 000-naira minimum wage, starting from September. The State Executive Council announced on Monday after deliberation on the impact the implementation could have on the states’ finance.
In a statement signed by Muyiwa Adegoke, the Special Adviser to the Governor on Media and Communications. The State’s Executive Council said the decision was spurred by the desire to improve the standard of living of workers in the State, which prompted the review of pay process back in 2018. And a cabinet committee has been set up to explore other means of revenue for the sustainability of the new salary structure.
The new salary structure means an increment at the tune of 67 percent for the most junior worker and middle rank workers from grade 10 – 14 will get a 60 percent raise.
But the State Executive Council is not oblivious to the financial challenges the decision will pose to the Kaduna State Government. According to the statement, paying the new national minimum wage and consequential adjustments will increase the wage bill of the State Government by 33 percent. And gross monthly salary outlay will rise to N3.759 billion from the current N2.827 billion.
That’s additional N1 billion to the monthly expenditures of the State, and that means wages are taking the Lion’s share of Government’s spending. And the only way to survive is to diversify means of revenue generation for the State. A situation the State Executive Council said they thoroughly considered before nodding yes to the approval.
“Guided by the twin principles of ability to pay and sustainability, the government considered several scenarios, bearing in mind the trend of internally generated revenues and allocations from the federation account. Several salary scenarios were considered, and one option was identified as the most prudent. A final decision was suspended as negotiations for a new national minimum wage appeared to gather momentum. It was reactivated after the Federal Government announced a new national minimum wage.”
Meanwhile, other states have been dragging feet in implementing the N30, 000 minimum wage that was signed into law in April by President Muhammadu Buhari. Although there have been some states who indicated interest to pay: like Sokoto, Bayelsa, Edo and kano, majority of the states are not forthcoming, with some states admitting their inability to proliferate their Internal Generated Revenue (IGR).
It could be recalled that many states were unable to pay workers N18, 000 minimum wage for months, until the Federal Government provided them with bailout funds. Even at that, some states are still owing workers. Apart from Lagos, the rest of Nigerian states depend solely on the revenues from the Federal Accounts Allocation Committee (FAAC), which has not been sustainable for years now due to low oil revenue.
The slump in oil prices has created a vacuum in the states’ financial structure that they don’t know exactly how to fill. And many Governors have resorted to borrowing to foot their states’ bills which is mainly wage bill.
So the excitement and hope that followed the passage of the new minimum wage bill are dying a slow, unfortunate death. The Nigerian Labor Congress, has threatened to embark on a nationwide strike if the new minimum wage is not implemented in all states as soon as possible.