Fear of Inflation Mounts as Buhari Approves New Minimum Wage-Deji Elumoye, Omololu Ogunmade, Shola Oyeyipo
To send enabling bill to N’Assembly Transmits three-year MTEF Labour’s CWC meets today
As workers and their unions celebrate
the N30,000 new minimum wage approved by President Muhammadu Buhari
yesterday, analysts have expressed fear that the fresh wage regime could
put inflationary pressure on the already fragile economy.
Those who spoke to THISDAY said the 60
per cent minimum wage increase was likely to lead to a general increase
in prices of goods and services in the short-term.
One of them, the Chief Executive
Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane,
pointed out that the wage hike would lead to inflationary pressures.
He said, “Productivity growth in Nigeria
is still minus 0.7 per cent. So, an increase in the minimum wage and
all other increases that would follow and it means that basically
inflation is likely to increase.
“Our projection is that inflation will go from 11.5 per cent to around 13 per cent because of the wage increase.
“If you add the election spending and
the promissory notes the government has issued for contractor debt of
N483 billion; when we add the money supply of the contractor note, the
minimum wage and negative productivity, you have an inflation.”
When asked about the likelihood of an
interest rate hike, he said, “Not really, because there is a
transmission time lag between when money supply rises and when prices
rise.
“The transmission time lag is between three and six months.”
Buhari had received the report of the
National Minimum Wage Tripartite Committee yesterday in Abuja and
approved the new figure, effectively ending the first phase of the
workers’ struggle for pay increase.
Receiving the report of the committee
from its chairman, Ms Amal Pepple, in the Council Chamber of the
Presidential Villa, Buhari told members of the committee, the organised
labour and government representatives that henceforth, he would put the
machinery in place for the transmission of the new National Minimum Wage
Bill to the National Assembly.
The president, who said he was committed
to seeing the new wage come into fruition, chronicled all the events
leading to the final resolution, saying he was regularly briefed on
updates on the negotiations.
Promising that the government would
continue to engage the organised labour wherever necessary, Buhari
thanked all who participated in the process.
However, he counselled the organised labour not to allow themselves to be used as political weapons by politicians.
He said, “In a way, both arguments are
valid. I want to assure you all that we will immediately put in place
the necessary machinery that will close out these open areas. Our plan
is to transmit the Executive Bill to the National Assembly for passage
within the shortest possible time.
“I am fully committed to having a new National Minimum Wage Act in the very near future.
“Let me use this opportunity to
recognise the leadership of the organized labour and private sector as
well as representatives of State and Federal Governments for all your
hard work. The fact that we are here today, is a notable achievement.
“As the executive arm commences its
review of your submission, we will continue to engage you all in closing
any open areas presented in this report. I therefore would like to ask
for your patience and understanding in the coming weeks.
“May I therefore, employ workers and their leaders not to allow themselves to be used as political weapons.’
In her submission, Pepple narrated how the decision to finally peg the minimum wage at N30, 000 was arrived at.
She also reported that the draft of the
New Minimum Wage Bill that would be sent to the National Assembly had
already been produced.
Pepple explained, “To arrive at our
recommendation, the committee carefully weighed the demand of the
Nigerian workers, which was predicated on the high cost of living
occasioned by unfavourable exchange rate and rising inflation over the
past few years, among other factors.
“The committee also considered the
overall macro-economic indicators, including the revenue and expenditure
profile of government as provided by the Ministers of Budget and
National Planning and Finance as well as the minimum wage proposed by
some state governments in their memoranda submitted to the committee.
“Consideration was also given to the
critical role of the informal sector in employment generation and the
need for a realistic minimum wage that will not stifle the growth of the
sector and the overall economy.
“After carefully weighing these critical
factors and bearing in mind the overriding interest of the economy, the
committee, while noting the offer of N24,000 by the federal government,
is recommending an increase in the existing minimum wage from N18,000
to N30,000.
“We believe that the implementation of
the recommended minimum wage, will, no doubt, boost the purchasing power
of workers, increase consumption expenditure and ultimately stimulate
business and overall economic growth.
“The committee has also produced a draft national minimum wage bill 2018 for condition by government.
“We strongly believe that the enactment
of the draft bill into law is very critical to the operation and future
reviews of the national minimum wage.”
National Assembly Receives Three-year MTEF
Meanwhile, the president has submitted a
three-year (2019- 2021) Medium-Term Expenditure Framework and Fiscal
Strategy Paper to the Senate for approval.
He also submitted the same proposal to the House of Representatives for expeditious consideration.
Buhari had in an October 29 letter
titled ‘Submission of 2019-2021 Medium-Term Expenditure Framework And
Fiscal Strategy Paper’ addressed to Senate President Bukola Saraki and
read at plenary by Saraki yesterday stated that he was sending the
fiscal strategy paper based on the provisions of the Fiscal
Responsibility Act, 2007.
According to the president, the preparation towards submission of the 2019 budget to the National Assembly is progressing well.
The Medium Term Expenditure Framework,
MTEF and Fiscal Strategy Paper, the President explained, “were prepared
against the backdrop of a generally uncertain global economic
environment; as well as fiscal challenges in the domestic economy to
ensure that planned spending is set at prudent and sustainable levels
and is consistent with government’s overall developmental objectives and
inclusive growth”.
While canvassing for an expeditious
approval of his proposal, Buhari said, “I hereby forward the 2019-2021
MTEF and FSP to the Distinguished Senate and trust that it would be
expeditiously considered in order to bring the 2019 FGN budget
preparation process to timely closure.”
At the House of Representatives, Speaker Yakubu Dogara, read a similar letter at yesterday’s plenary
The MTEF, which was approved by the
Federal Executive Council (FEC) meeting of Wednesday, October 28, had
proposed a $60 oil price benchmark, 2.3 million barrels per day at
$305/$1 exchange rate and 3.01 per cent GDP growth rate for the 2019
budget.
The FEC, according to Minister for
Budget and National Planning, Senator Udo Udoma, approved a proposed
N8.73trillion budget for 2019 fiscal year, which is N400 billion less
than the N9.12trillion approved for 2018 fiscal year.
Also yesterday, Saraki read out a letter
dated October 24 from Buhari requesting for the confirmation of the
appointment of Hon. Abike Dabiri-Erewa, as the Chairman/ Chief Executive
Officer of Nigeria Diaspora Commission in compliance with Section 2(1)
of the Nigeria Diaspora Commission (Establishment) Act, 2017.
The president also sought Senate
confirmation of Mr. Chidi Izuwah as Director-General of Infrastructure
Concession Regulatory Commission and the substitution of Chief Olabode
Mustapha with Mrs. Ronke Sokefun as Chairman of the Nigerian Deposit
Insurance Corporation, (NDIC).
A six- man governing board of the
National Bureau of Statistics (NBS), headed by Dr Kabiru Nakuara was
also presented to the Senate by the president for confirmation in
compliance with Section 8(2) a & j of the Statistics Act, 2010.
The Senate also yesterday approved the
establishment of two federal polytechnics and two colleges of education
in various parts of the country.
This was sequel to the presentation of
the reports of the Chairman of the Senate Committee on Tertiary
Institutions and TETFUND, Senator Jibrin Barau (Kano North), calling on
the Senate to approve the establishment of the higher institutions.
The institutions include Federal Polytechnic in Aba, Abia State and another one in Selami in Sokoto State.
The others are Federal College of Education in Gumel, Jigawa State and Sabon Birini in Sokoto State.
Culled from Thisday
