The National Minimum Wage Act 2019 was enacted by the National Assembly to prescribe a minimum wage applicable to certain classes of workers across all sectors of the Nigerian economy and to provide a framework for the review of minimum wage in Nigeria. The Act, though once a welcome development, is no longer suitable to regulate minimum wage in light of recent developments. There have been calls for the upward review of the national minimum wage from the current N30,000. This article seeks to demonstrate that the minimum wage law is in dire need of reform as certain provisions are inhibiting its effectiveness. The article goes further to make recommendations for the amendment of problematic portions of the Act.
Keywords: Minimum wage, Employers, Workers, Compliance, Review
According to the International Labour Organisation (ILO)[1], minimum wage is ‘the minimum amount of remuneration that an employer is required to pay wage earners for work performed during a given period, which cannot be reduced by collective agreement or an individual contract.[2]
In Nigeria, minimum wage is defined as the minimum total amount of money an employer of labour is required to pay the lowest paid worker or employee monthly in his establishment.[3] Prior to 2019, the minimum wage was N18,000 as laid down by the National Minimum Wage (Amendment) Act, 2011.
Currently, the Nigerian government regulates minimum wage through the National Minimum Wage Act, 2019 (hereinafter called the “Act”) which set minimum wage at N30,000 a month. This Act applies to the entire federation of Nigeria.[4] The national minimum wage expires after five years.[5]
The purpose of minimum wage regulation is to set a wage floor that ensures that all employees receive a minimum level of compensation for work done by them. In other words, it protects workers against unduly low pay.
The government of every nation has a primary duty to ensure and enhance the economic well-being of all citizens. Through minimum wage regulation, the government prescribes the least possible wages that can be earned in a bid to overcome poverty and reduce the economic inequality between high wage earners and low wage earners.
Section 17 of the Act defines an ‘employer’ as ‘any person who has entered a contract of employment to employ any other person as a worker either for himself or for the service of any other person, and includes the agent, manager or factor of employer and the personal representative of a deceased employer.
The Act imposes two main obligations on employers.
Other offences that an employer may be guilty of are contained in section 15 of the Act.
A person who does any of the above acts is guilty of an offence and liable on conviction to imprisonment for a term not more than six months or a fine not more than N250,000.00, or both.[11]
An agent of the employer may be guilty of an offence under section 14 of the Act in the same way that an employer may be guilty of an offence under the Act. Where an action is brought against the employer, he may raise a defence by proving that the offence was due to the act or default of another person, or that he has exercised due diligence to ensure that the Act is complied with.[12] If the authorised officer is satisfied that the offence was due to the act or default of another person and that the employer has established his defence, he may recommend that an action be brought against that other person. Where it is proved in such action that the offence was due to that person’s act or default, he shall be convicted for the offence.[13]
The worker who is paid a salary below minimum wage is not left without remedy. By section 13(a) of the Act, such worker is entitled to the difference between his actual pay and the national minimum wage. Section 13 of the Act empowers the aggrieved worker, trade unions and the Minister to take certain measures to ensure the employer complies with the Act.
The standard of living in Nigeria is quite low. To make the standard of living in Nigeria comparable to that of developed countries, there is a need to increase the minimum wage. As workers earn more, they would be able to afford a higher standard of living and be better equipped to handle periodic increase in the cost of living. There would equally be increased productivity as workers would be more motivated. A higher minimum wage may have the short-term effect of increasing operating costs and in turn, the prices of goods and services (inflation). There would be loss of jobs and underemployment.[25] However, this would even out in the long-run with expected economic growth. In 2023, organised labour proposed a minimum wage of N200,000 following the removal of fuel subsidy.[26]
In accordance with the provision of the Act for review of minimum wage every five years, the national minimum wage is set to be reviewed this year. On the 63rd anniversary of Nigeria’s independence, the President announced that temporary measures would be taken to increase the wages of low-level federal workers by N25,000 for the next six months, pending the time that the National Assembly may enact an amendment increasing the national minimum wage. This was a provisional measure taken to avert the threatened strike action by organised labour.[27]
The Act prescribes a review of the national minimum wage every 5 years. This is not ideal. The periodic review should be biennial on a specified date, e.g. January 1. This would force the government to be more proactive and avoid using delay tactics as they have a shorter time-frame to consider. Additionally, the citizens’ suffering under harsh economic conditions would not be prolonged.
In 2023, the National Assembly expressed their intention to fast-track the passing of the amendment Act. However, as at the last week of January 2024, just three months to the expiration of the current minimum wage, the government is still yet to set the ball rolling by inaugurating the Tripartite Committee on Minimum Wage even though the Trade Union Congress and Nigeria Labour Congress have submitted the names of their representatives.[28]
There is a need for the law to clearly spell out the number of hours of work that will make up a month’s worth of full-time work. This will promote respect for a worker’s time and ensure maximum productivity. This would also mean that employers would have to set up a system of overtime pay for extra hours worked by their employees, thereby promoting fair compensation. This practice obtains in the USA where non-exempt employees working in excess of 40 hours per workweek are entitled to overtime pay.[29]
The cost and standard of living varies from one state to another. This is why the regulation of minimum wage should not be within the exclusive jurisdiction of the federal government. The Constitution should be amended to move Item 34 of the Exclusive Legislative List to the Concurrent Legislative List, thereby giving states the power prescribe the minimum wage applicable to their territory in line with their local peculiarities.[30] This is what obtains in the USA which operates a true federalism. However, implementation of this suggestion will require a structure built on fiscal federalism where states control their own revenue and expenditure. Unfortunately, Nigeria does not practice fiscal federalism.
In addition to enforcement mechanisms provided under the Act, where it is shown that an employer has violated the provisions of the Act, the names of such employers and companies should be published in nationwide newspapers and a periodic journal for that purpose. However, reasonable notice should be given to such employer that such action would be taken if violation continues. This “naming and shaming” strategy has been employed in Indonesia and Brazil. Employers would have to pay all necessary fines and wages in order to have their names removed from the list. The risk of loss of reputation should be the force that will promote compliance. Those on the list should not be given credit facilities as well.
There is a need to educate employers and workers covered by the Act on their rights and obligations under the minimum wage provisions. Many workers, especially in the rural areas, are ignorant of the enforcement mechanisms.
Nigeria should ratify and domesticate international conventions and treaties bordering on wage regulation. This would signify the government’s willingness to promote fair labour standards. This would attract immigrants and curb the ‘japa’ brain-drain problem.
This article gave a cursory look at minimum wage regulation in Nigeria. It highlighted the shortfalls in the legal and regulatory framework for minimum wage and made recommendations for the amendment of problematic portions of the Act which are incompatible with the economic growth and development of Nigeria. The writers believe that these recommendations, if implemented, will benefit workers and promote a pleasant working relationship between employers and workers in Nigeria.
[1] The ILO is a specialised agency of the United Nations Organisation charged with codifying and monitoring compliance with international labour standards and best practices by member states.
[3] National Minimum Wage Act 2019, section 3(2)
[5] ibid, section 3(4)
[6] ibid, section 17
[8] National Minimum Age Act 2019, section 17
[9] ibid, section 3(2)
[10] ibid, section 3(1)
[11] National Minimum Wage Act 2019, section 15
[12] ibid, section 14(2)
[13] ibid, section 14(4)
[14] National Minimum Wage Act 2019, section 12(2) & (3)
[18] Constitution of the Federal Republic of Nigeria, 1999 (as amended), section 254C (1); National Industrial Court Act, 2006, section 7(1)
[19] National Minimum Wage Act 2019, section 13(b)
[20] ibid, section 13(c)
[21] ibid, section 13(d)
[22] Felix Ashakah, ‘Nigeria’s minimum wage below minimum healthy living cost: What’s the way out?’ (2022) Business Day < https://businessday.ng/opinion/article/nigerias-minimum-wage-below-minimum-healthy-living-cost-whats-the-way-out/> accessed 9 January 2024.
[24] National Minimum Wage Act 2019, section 3(4)
[25] J.B. Maverick, M.J. Boyle and P. Rathburn, ‘What Are the Pros and Cons of Raising the Minimum Wage?’ (2023) Investopedia < https://www.investopedia.com/articles/markets-economy/090516/what-are-pros-and-cons-raising-minimum-wage.asp> accessed 6 January 2024.
[26] Editorial, ‘Rethinking Nigeria’s Minimum Wage’ Leadership News (2023) accessed 18 January 2024.
[27] Ifeoluwa Akinola, ‘Updated: Tinubu announces N25,000 provisional wage increase for low-level workers’ Nigerian Tribune (1 October 2023) < https://tribuneonlineng.com/updated-tinubu-announces-n25000-provisional-wage-increase-for-low-level-workers/> accessed 23 January 2024
[29] USA Fair Labour Standards Act of 1938 (as amended), 29 U.S.C. § 207