MINIMUM WAGE INCREMENT; A RIGHT OR NOT? – OLADELE ABIGAIL
The agitation of an upward review of the minimum wage is no longer a news to anyone. Most individuals feel it is a lawful demand considering the skyrocketed prices of goods and services and increase in the exchange rate of naira to dollars. To an economist, the argument as to whether the minimum wage increment is a lawful demand or not is debatable.
Minimum wage is the lowest wage permitted by law. it is the price floor below which workers may not sell their labour. The minimum wage was designed to create a minimum standard of living to protect the health and well-being of employees. The minimum wage for each country varies. In Nigeria, there have been no structure about the minimum wage till the association, Nigeria Labour congress (NLC) was put in place in 1978. The president of the association then, was Comrade Hassan Sunmonu.
Over the years, there have been controversies concerning the minimum wage. It started in 1979 when there was a rise in the pay of political leaders. Comrade Sunmonu started agitating for a new minimum wage of N300/month but came to an agreement of N125/month. Another negotiation came up led by Comrade Adams Oshiomole and the minimum wage was increased to N250/month. However, in 1989, the military regime then banned the NLC but the minimum wage was increased to N3000. Following a change of government to President Olusegun Obasanjo, the NLC came fully into existence led by Comrade Adams Oshiomole. In 2001/2002, there was a change in the structure, state workers received N5,500 while federal workers and oil-producing states received N7,500 for the minimum wage. The current N18,000 minimum wage was achieved in 2010, due for a review since 2015, was negotiated under NLC President Abdulwahed Omar.
One common feature of this increment is that there have been a nationwide strike leaving most economic activities on hold. For example, the ASUU strike, civil servant indefinite strike e.t.c. This raises an issue to individuals on whether the government is willing to increase the minimum wage or not.
The proponents of this argument claims that an increase in minimum wage will help the economy as it will increase the purchasing power of individuals thereby increasing their standard of living. They also believe that it will bring about increase in worker’s productivity as they will perform at optimum level since they are well remunerated.
The opponents, however gave a different view. They believe minimum wage should not be increased as companies will suddenly have to pay a higher wage or salary to its workers. This has two effects on the economy. The first being that business profit will be affected. If firms pay a higher wage rate, profits will fall. Business firms can then think of increasing the prices of goods and services so as to maintain their profit. However, this flues inflation. If firms don’t want their profits to be affected, they lay off workers since they don’t want to operate at a loss. This leads to unemployment, the second effect.
Economist argued that increasing the minimum wage or not won’t help the economy. if government should increase the minimum wage rate, money supplied into the economy will be increased. The economy will be at disequilibrium, which will bring about increases in price, unemployment, etc. They believe that if government should increase money supply, there must be a corresponding increase in the demand for money. If this isn’t done, an increase in minimum wage will still bring about an increase in minimum wage. The history of increase in wages has proven this.
By Oladele Abigail
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Oladele Abigail, an economics student of Bowen University who applies her passion for writing to her career path.
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Businesses that makes a lot of money in the country without a significant reciprocal contribution to the development of the country should cease to exist. These businesses are zombies. They are vampires that need to be killed by the silver stick. 😠
Everyone knows that our economy is not an economy at these trying times, so why would businesses try to maintain their profits?
Everyone should short their rations but shortening these rations should not backfire on the public. Businesses should be able to absolve few negative impacts of the economy since they are not really been pulled out of business entirely. If they can’t, they’re not fit to operate in our country and with all respects if making money is what they’re concerned with only, they should get the hell out of our country.
Just in Time
I like your perspective, it’s a legit argument but I disagree that increment in minimum wage may not increase the standard of living. Things are becoming more expensive, rate of dollars to naira skyrocketing,
I’m of the opinion that the best solution to this is increment in minimum wage!
Hi
Thank you!
I understand your perspective, the minimum wage should be increased. But don’t you think that traders will increase the prices of goods when they find out the wage rate has been increased?
If the wage is increased, workers will have more money and will want to increase their consumption. Imagine workers who gets 2 unit of a product now getting 4 units due to this increment… The demand will be high!.. With little goods, traders will want to increase the price to make profit, so the increment in wage will be used to fill in the increment in prices.
Economist therefore says that if there should be an increment in wages , there should also be an increment in production.
I hope this explains this.
Pelumi this is really cool, keep it up
Thank you 💞
Really insightful. Great job Abigail
Thank you 💞