According to the constitution of Federal Republic of Nigeria, like the police force, we shall also have a uniform minimum wage across the country. And that shows what will be the new minimum wage in Taraba state will also be the new minimum wage in Abuja or Lagos regardless of the standards of living and the cost.
What is the economic implications of increasing the minimum wage? Did it not take more than just a minimum wage to guarantee a better living for Nigerians? Of course it does.
The basic problems of a common Nigerian are far been solved by a mare increase in the minimum wage. The basic problems of common Nigerian includes some of the following:
-Food
-Shelter
-clothing
-health care
-education
-infrastructure
-and even social welfare.
With the newly poverty index rate just released by the United Nations, it shows that the gap between the poor and rich in Nigeria is on a continuous increase. And that shows they cannot eat three square meals a day. They cannot live in the houses they should. They cannot buy the clothes they need. They cannot afford a better health mechanism. They cannot pay for a standard education for their children. No infrastructure to better their lives in the community. The social programs too are insubordinate to relive them of these appalling malady.
The market implications of the increase in minimum wage with out any doubt will be increase in the general level of prices in the market. Because of the positive relationship between income and consumption, and also the positive relationship between price and supply. When the incomes of household increases their consumption is also increasing by 0.8% that is the marginal propensity to consume of Keynes. For instance as at now the minimum wage is #18,000 that show the households consumes 80% (#14,400) of their respective income and are subjected to save 20% (#3,600) of it.
Now let's assume the minimum wage has been increased to #56,000 as the debate has been on, that means 80% of the income goes to consumption which is #44,800. And saving up increases to #11,200.
Increase in consumption means to increase in demand to the producer, and increase in demand will serve as an incentive for the producer to drive up the price. Behold our economy has been inflated. Thanks to the Demand Pull Inflation.
Should we not then increase the minimum wage? No. The minimum wage should be increased, however the basic needs of every Nigerian must be appropriately dealt with the political institutions. Education is the priority of every sane household, they want their children to enjoy a good one. If government can adequately deal with poor education, poor infrastructure, poor health care, shelter, etc. I see nothing wrong in increasing the minimum wage. For this will reduce their consumption on the things the government have finally take care and subsequently invest their leakages.
The problem the minimum wage is already creating has been fully neglected! What the new minimum wage will mean for somebody in Kano or Taraba state can never mean the same for somebody in Abuja or Lagos where the cost of living is inexorably high. The constitution stated a uniform minimum wage, however, I don't think this model is still working the way it should. For instance in the US the state of Massachusetts is paying the highest minimum wage in the whole of US because they can afford it. If for instance Lagos state can pay the new minimum wage, how about other states as well?
We also have to look at this announcement from another angle, sycophantic dimension.
Mustapha Boss, Secretary General of the Federation(SGF), was at the 40th anniversary of the NLC, Nigerian Labour Congress, when he made this announcement of the minimum wage. Does he made it for the people to applause him? Is he saying it for the sake of saying? All this can be answered only when our lives have been spared to September. For we have had so many instances in the history of Nigerian polity where people just say things for the sake of saying while underground they mean exactly the opposite!
Yusuf Nasir Ahmad
04/03/2018.
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