As discussions about a new minimum wage gain momentum, former Minister of Works, Babatunde Fashola, has emphasized the need for reasonable income adjustments to help Nigerians cope with the rising cost of living.
In a piece titled ‘Minimum Wage Review – My Take Away,’ Fashola, a former Lagos State Governor, expressed that all income earners are affected by the increased cost of living and thus, deserve appropriate adjustments.
“When the cost of living rises as they have now, the lowest and the highest income earners are impacted to varying degrees and therefore deserving of reasonable adjustments whether they earn wages or salaries,” Fashola stated.
Fashola also criticized Section 4(1)(b) of the National Minimum Wage Act 2019, which exempts establishments employing fewer than 25 people from paying the minimum wage.
He argued that this exemption undermines the purpose of the law.
“The exemption of such establishments raises serious doubts about whether we have enacted a minimum wage Act if small businesses who barely have 25 employees but who employ the largest number of the most vulnerable people are exempted from the law as currently legislated. Who then is the law protecting?” he questioned.
As a Senior Advocate of Nigeria, SAN, Fashola highlighted a constitutional issue with the current legislation.
He pointed out that item 34 of the 1999 Constitution, as amended, gives the National Assembly the power to prescribe a national minimum wage but not a monthly salary.
“It seems obvious from this definition that by making a law in Section 3(1) of the Minimum Wage Act that the minimum wage of N30,000 shall be paid monthly, the NASS may have acted unconstitutionally by legislating on a SALARY (monthly payment) when they only have power to legislate on WAGES, an hourly payment,” he explained.
“This is important while the conversation on minimum wage is being had in 2024 because in Section 3(4), the minimum wage “shall be reviewed in line with the provisions of this Act” which includes Section 3(1) that has prescribed a monthly amount instead of an hourly wage.”
“Of course, if and when we decide as a country on the implementation of a proper minimum wage, we must then design a formula to review salaries of those who do not earn wages in order to assist them deal with cost-of-living challenges.”
“This may yet be the most fruitful outcome of the dilemma of appropriate employee compensation as it may lay the foundation for national productivity, wealth creation and prosperity. The opportunity is too big to miss or waste,” he added.
Fashola called on experts in labour law and compensation matters to collaborate and seek global expertise.
He also suggested a possible constitutional amendment to include salaries in the Exclusive Legislative List.
