Report: Kogi, Kano, Oyo Lead Top States That Cannot Pay New Minimum Wage
- A new report has identified Nigerian states with the least ability to pay the proposed minimum wage
- The report said the states have low revenue, high personnel costs, and high debt profile
- It also identified Imo, Lagos, and Zamfara states as the states with a high ability to pay
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.
Analysts at Data Services and Resources (ADSR), a research company, have identified Benue, Osun, Oyo, Kogi, and Kano as states with the least ability to pay and finance a new minimum wage.
Other states struggling to pay the new minimum wage are Adamawa, Jigawa, Kebbi, Plateau, Nasarawa, and Ekiti.
Source: Facebook
States with a high ability to pay
The report, however, identified Lagos, Imo, and Zamfara as having the highest ability to pay.
The Ibadan-based research firm adopted four metrics to arrive at the new rankings.
In calculating the states’ ability to pay the new minimum wage, the company examined the ratio of personnel expenditures to total expenditures, total revenue, internal revenue, and states’ total debt stock.
According to the report, the states with relatively high ability to pay currently have low personnel expenses to total expenditure ratio and low personnel expenses to revenue ratio, especially internally generated revenue, low debt profile, and high elasticity of personal costs contribution to future revenue expenditure.
Report identifies benefits of increasing wages
It disclosed that a new minimum wage becomes necessary due to the renewed pressure on the disposable income of workers encouraged by various government reforms.
The research firm’s economists said that increasing the minimum wage would positively impact states’ IGR through personal income tax.
The report said:
“Government will also need to invest in some capital projects to align with workers’ new pay and show the public the need to raise taxes needed to fund increased spending.”
Six ways to finance a new minimum wage
The company highlighted six ways states could finance a new minimum wage, such as by raising the tax base and investing in an effective tax system.
It stated that the government must consider the economic situation in Nigeria and avoid multiple taxes to improve its business environment.
Organized labour in Nigeria is demanding N615,000 as a new minimum wage, citing the expiration of the five-year minimum wage act.
Reports say negotiations between the government and the government are ongoing, with the proposed amount decreasing to N250,000 as of June 7, 2024.
The committee minimum recommended N62,000 to the Nigerian government on June 10, 2024; the National Assembly disclosed its willingness to approve an increase to N70,000.
Southern governors make fresh proposal for minimum wage
Legit.ng previously reported that Nigerian governors, under the umbrella of the Southern Governors' Forum, have called on stakeholders to consider granting each state the opportunity to negotiate the minimum wage it can pay workers.
The governors made the call on Thursday, June 27, a day after the Nigerian Governors' Forum promised continuous engagement with stakeholders to consider mutually agreeable solutions over the controversies surrounding the minimum wage.
President Bola Tinubu attended the National Economic Council (NEC) meeting, usually chaired by vice-president Kashim Shettima, unusually.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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Source: Legit.ng
