Babatunde Fashola, the Former Minister of Works and Housing, has raised a significant constitutional issue. He argues that the National Assembly might have overstepped its bounds by legislating on salaries instead of focusing solely on the minimum wage.
In his recent article, “Minimum Wage Review – My Takeaway,” Fashola dives deep into the specifics. He points out that the constitution explicitly allows the legislature to set the country’s minimum wage, not salaries. The distinction here is crucial: a salary is a fixed regular payment, often monthly, while a wage is typically paid by the hour.
Organized labor groups have been pushing for an increase in the minimum wage from N30,000, driven by rising inflation and surging food prices. The federal government has offered N62,000, but labor unions are holding out for N250,000.
Fashola suggests that the constitution should be amended to permit the setting of minimum salaries for workers. This would clarify the legal framework and ensure that the National Assembly’s actions are constitutional.
Fashola cites his monograph, “The Nigerian Public Discourse: The Interplay of Empirical Evidence and Hyperbole,” to support his argument. He notes that the term used in the constitution’s exclusive legislative list is “minimum wage,” not salaries. He emphasizes that wages and salaries are distinct concepts and should not be conflated. Efforts to improve the minimum wage should focus solely on that goal and not inadvertently lead to a comprehensive salary overhaul.
Fashola argues that by setting the minimum wage at N30,000 per month, the National Assembly may have unintentionally legislated on salaries. This is because a monthly payment aligns more closely with the concept of a salary rather than an hourly wage. He underscores the importance of this distinction, especially as discussions about the minimum wage continue into 2024. According to Section 3(4) of the Minimum Wage Act, the minimum wage must be reviewed in accordance with the act’s provisions, which currently stipulate a monthly amount instead of an hourly wage.
To illustrate his point, Fashola breaks down the calculation of an hourly wage. If we consider the global method of computing wages—dividing the gross annual sum by 52 weeks and then by 40 hours per week—Nigeria’s minimum wage would be significantly different. Instead of N30,000 per month, the calculation would yield an hourly wage of N173.07. This highlights the error in equating monthly minimum salaries with wages, which has led to inflated compensation structures that employers struggle to sustain.
Fashola also emphasizes the need for adjustments in both high and low-income earners’ salaries and wages due to the rising cost of living. He believes that fair compensation adjustments are essential to help workers cope with inflation and the increasing costs of basic necessities.
Fashola’s insights call for a reevaluation of the legal framework surrounding minimum wage and salaries in Nigeria. He advocates for a constitutional amendment to explicitly allow the legislature to set minimum salaries, which would remove any ambiguity and ensure that the National Assembly’s actions align with constitutional provisions. This adjustment would provide a clearer and more effective approach to addressing wage issues in the country.
The misinterpretation of wages and salaries has practical implications for both employers and employees. Employers are burdened with inflated salary structures that are difficult to maintain, leading to potential financial strain and operational challenges. On the other hand, employees face the uncertainty of whether their compensation is being set and adjusted fairly according to constitutional guidelines.
As Nigeria continues to grapple with economic challenges and the rising cost of living, legislative clarity on wage and salary regulations becomes even more critical. Ensuring that the National Assembly operates within its constitutional limits will help create a fair and sustainable wage system for all workers. Fashola’s call for an amendment is a step toward achieving this goal, promoting transparency and fairness in the legislative process.
