June 13, 2024

Minimum wage increase without productivity has serious implications on economy — Bismarck  Rewane


Prominent economist Bismarck Rewane

By Miftaudeen Raji

The Managing Director of Financial Derivatives Company Limited, Bismarck Rewane, says increasing the minimum wage without productivity has serious implications on the nation’s economy.

Rewane stated this in an interview with Channels Television on Thursday.

The economist warned that increasing the country’s minimum wage from ₦30,000 without an increase in productivity is tantamount to printing more money which could cause inflationary pressure. 

He cited the Minimum Wage Act 2019 signed by then President Muhammadu Buhari which exempted employees in firms employing less than 25 employees, from the receipt of the current ₦30,000 wage. 

The 2019 Act, which expired in April 2024, should be reviewed every five years to meet up with contemporary economic demands of workers.

Rewane said, “As long as you employ more than 25 people, you are bound by law to pay the minimum wage and failure to pay the minimum wage is an offence punishable by N75,000 fine, and N10,000 every day that you did not comply. The penalties are quite huge.

“So, it is something that we need to consider as the total wages paid in the country versus the productivity and output of the people, versus the wealth of the people.

“The thing about the minimum wage is that it has serious implications when you increase wages by certain magnitudes, productivity is stagnant because of power and other infrastructural bottlenecks, and at the same time;

“You are compelled to begin to find out how to fund it (minimum wage) because an increase in wage without an increase in productivity, which is tantamount to actually printing money, has long time implications for the economy.

“And time is not on the side of Nigeria right now. It is an emergency. The Federal Government and everybody have to come together very quickly or else it goes out of hand.”

Recall that President Bola Tinubu, in his Democracy Day speech on Wednesday, assured the Organised Labour that an executive bill on the new national minimum wage for workers would soon be sent to the National Assembly for passage.

The President would make a decision on the ₦62,000 proposal of the government and private sector side; and the ₦250,000 demand of the Organised Labour.