Ecn 101 Principles of Economics

ECN 101: PRINCIPLES NAME: NAFI’U

OF ECONOMICS

SALE AHMED GIMI

REG NO. 102061773 DEPT.: ACCOUNTING

DEPARTMENT

(a)Minimum wage may be defined as the ‘’rate of pay fixed either by a collective bargaining agreement or by governmental enactment as the lowest wage payable to specified categories of employees (b) A minimum wage is the wage considered sufficient to satisfy the vital necessities of food, clothing, housing, education and recreation of the worker, taking into account the economic and cultural development of each country ; (c) A minimum wage represents the lowest level of remuneration permitted, in law or fact, whatever the method of remuneration or the qualification of the worker; (d) A minimum wage is the wage which in each country has the force of law and which is enforceable under threat of penal or other appropriate sanctions. Here in Nigeria, arising mainly from the fact that the government is both the regulator and the largest employer of labour, the actions of government in the area of wage determination are usually very fundamental and hence the history of

minimum wage in Nigeria cannot be separated from the history of public service wage negotiations and increment, which dates back to the colonial era and the setting up of the Hunts Commission in 1934. For instance as early as 1943, the wage fixing and registration ordinance had come into force establishing wage boards modeled after those of the United Kingdom. Also in 1946, the British Colonial Secretary , issued a circular letter to all heads of government departments requesting them to take immediate action to ensure that proper wages and conditions of labour were observed in all contracts entered into with the assistance from the government. This was the beginning of the ‘fair wage clause’ in government contracts. Off course, fairness of wages has to be judged with reference to government’s own wages and this is a further confirmation that the wages paid by the government has a more far reaching implication than those paid in the private secto Today, Nigerians who are lucky to have jobs are finding it increasingly difficult, if not impossible, to survive on their monthly pay. The major reason for this is that the pay of the Nigerian worker is not only one of the lowest in the world; it has also not improved as it should in the face of changes in market conditions. Workers in the public sector are particularly worse off.

As huge revenues have continued to be acquired from the sweat of workers, the pay and conditions of workers have continued to deteriorate; workers have increasingly been excluded from the wealth created by their labour.

In Nigeria, the difference in pay between managers and workers is not only one of the highest in the world: out of every N1 paid as wages, managers collect more than 80 kobo while workers receive less than 20 kobo; the difference has been increasing over the years.

At the same time, owners and managers of banks, top government officials and members of the political class have seen their pay and wealth swell astronomically while workers have had to survive on starvation wages.

Workers can no longer survive on what they earn; the situation is made worse by the fact that those who work also have to support family members who form part of the huge army of the unemployed. It has become crystal clear that there is an urgent need for an upward review of the national minimum wage and an upward general review of wages and salaries.

In Sub-Saharan Africa (SSA), Nigeria ought to be paying one of the highest minimum wages, given its resources and level of development. The reality, however, is that the existing minimum wage in Nigeria is one of the lowest in Africa The current national minimum wage of N7, 500 is far below the minimum cost of providing basic needs for the worker and his / her immediate family. My survey shows that today the minimum cost of providing for basic needs is N58, 200 this estimate is based on threshold hardship levels in which 6 or 8 people may be forced to live in one or two rooms and endure a dietary and living style that is most rudimentary. Additionally, it should be noted that N18, 000 is allegedly spent on the feeding of one prison inmate monthly, while the estimate here is merely N20, 000 for the feeding of a family of 6 per month.

Effect of the 18,000 minimum wage on the Nigerian Economy Is the minimum wage proposed by the NLC reasonable, sustainable and affordable? Would it have a positive effect on the Economy? Can the nation pay the new national minimum wage? The answer to both and related questions is an overwhelming YES! It is a resounding YES for the following reasons: (i) An increase in the purchasing power and effective demand of workers will increase the demand for goods and services and translate into growth for the

economy. The morale, and therefore, productivity of workers will be greatly enhanced by the wage review. (ii) Nigeria earns enough revenues, even with the downward slide in oil prices, to be able to pay. The problem in Nigeria is massive corruption by members of the political and administrative elite and not lack of resources. To be sure, paying the new minimum wage will require that members of the political class cut their level of stealing of public funds. This will not be a bad thing; in fact, it will be good for the economy. (iii) If the economy can accommodate the huge sums spent on political office holders, it can accommodate a general upward review of wages and a national minimum wage as proposed. In any case, more resources should be devoted to the productive workers in any economy. Apart from political office holders, the profits declared in most areas of the private sector, continue to be massive. Even sectors which are contracting their operations continue to declare huge profits. Therefore, the public and private sectors of the economy are capable of paying higher wages. Recommendation This recommendation is made with great patriotism, sensitivity and responsibility. It is known that the Nigerian Labour Union held series of collective bargaining and negotiations with the Government and they did it with the spirit of democracy. As such I call on government to set up the necessary structures for the implementation

of their agreements without further delay. To delay implementation will further compound the living conditions of workers of Nigeria in the face of the alarming mass poverty already destroying their lives. Conclusion Patriotism, sensitivity and responsibility should be the watch word of Government. If the Government is responsive enough, they will listen to the yarning and aspiration of her workers.