In an attempt to define employment and financial stability, two terms often thrown around are “minimum wage” and “living wage.”
These concepts have become a labyrinth in a place like Nigeria, where beautiful policies fail to fly and disruptive realities phase out fluffy ideas.
Minimum Wage vs. Living Wage: What’s the Difference?
The minimum wage, a legal requirement, signifies the lowest amount an employer must pay their workers. However, it may fall short of covering the basic costs of daily living. On the other hand, a living wage is tailored to cover essential needs like food, housing, and clothing, aiming to provide a decent standard of living without financial worries.
Both wages evolve over time, influenced by factors such as inflation. While the minimum wage might incrementally keep pace with rising prices, the living wage aspires to grow more rapidly, aligning with the increasing expenses associated with leading a decent life.
Historical Battle for National Minimum Wage in Nigeria
The saga of determining a national minimum wage in Nigeria dates back to 1981, with various contentious episodes involving the government, private sector employers, and organized labor.
As the nation gears up for negotiations on a new minimum wage, there’s a collective call for a seamless process that ensures a timely agreement and implementation, particularly given the prevailing socio-economic challenges.
Living Wage: A Solution to Poverty?
Addressing poverty in Nigeria, where 71 million people live in extreme poverty according to the World Poverty Clock 2023, requires a nuanced approach.
While a living wage may not eradicate all poverty, it aims to uplift the working poor by ensuring those reliant on paid work have a sustainable income.
Considering that most Nigerians are self-employed, the 2024 national living wage planning should acknowledge this employment landscape.
The Living Wage Standard and Its Implications
A living wage isn’t merely a figure; it represents a socially acceptable income level covering basic necessities like food, shelter, child services, and healthcare. It sets a standard where no more than 30% is spent on rent or a mortgage, surpassing the poverty level.
This concept has historical roots, tracing back to early America when workers advocated for higher pay.
Challenges and Opportunities in Establishing a Living Wage
Determining an adequate living wage is intricate, varying based on factors like the number of dependents and geographical location.
The question arises: Would a living wage of around N360,000 per month, considering international rates, be a viable solution for averting increasing working poverty in Nigeria?
In the midst of these deliberations, the government’s role becomes pivotal.
NLC’s Position On Living Wage For Nigerians
The President of the Nigeria Labour Congress (NLC), Joe Ajaero, expressed his hope that the new minimum wage would align closely with a living wage. He sees this as an opportunity for the government to establish standards that alleviate the hardships imposed on Nigerian workers due to policies like the removal of subsidies.
Ajaero emphasized that the activation of the mechanism for negotiation would depend on the inauguration of the wage negotiation committee. Currently, he noted, the Federal Government is hesitating on this matter, stressing that the committee must be inaugurated before delving into the details of the minimum wage fixing process.
Highlighting the significance of the minimum wage approximating a living wage, Ajaero argued that a national minimum wage falling short of this standard is deceptive. He asserted that a wage should cover basic living costs, emphasizing, “your wage is supposed to take you home and meet the basic cost of living.”
Ajaero called for a comprehensive negotiation process that considers factors such as the Consumer Price Index (CPI), inflationary rate, exchange rate, and poverty rate. Drawing attention to the UN principle stating that a person should not live below $2 a day, he applied this to the Nigerian context, explaining that an average family of six should not live below $12 per day. This underscores the importance of negotiating a minimum wage that reflects the actual cost of living in the country.
The Living Wage Monkey Wrench
Other stakeholders emphasize the need for a national minimum wage that approximates a living wage, aligning with the principle that one’s wage should cover basic living costs.
As Nigeria stands at the crossroads of negotiating a new national minimum wage, the balancing act between minimum and living wages takes center stage.
The outcome will not only shape the economic landscape but also influence the lives of millions striving for financial dignity and stability.
Culled in by Fortune Omosola
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