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Is Increase In Minimum Wage Really Beneficial ? - Business - Nairaland

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Is Increase In Minimum Wage Really Beneficial ? by pak: 8:06am On Jul 20, 2011
Is it just me ?
or
do i need more education on this issue.

I think the importance of increasing the minimum wage has been over-bloated by our labor leaders to serve their own purposes/ego.

I TOTALLY AGREE THAT THE INCOME OF MOST NIGERIAN WORKERS IS JUST TOO LOW.

But is the solution just to give everybody(worker) more money, I seriously do not think so.

I am not an Economist but my basic knowledge of economics tells me that
Increasing salaries ACROSS BOARD do not improve the standard of living of the populace, why ?

because at the end of the day we'll still buy from the same markets, rent from the same set of available accommodation and send our kids to the same pool of schools and you know what happens next, the forces of demand and supply do their trick.

If a section of the workforce e.g. the police have their salaries increased,(I believe this is important, considering the sensitive nature of their work, that's why many of them are damned corrupt, and while we are at it, we can also increase the minimum qual. and training for the force - my thoughts)
then we can talk of marked improvemnts in standard of living of that group.


I remember back in sec. sch when many used to claim that Nigeria is rich enough to improving the living standards of the citizen by distributing N1m to each and every Nigerian
I felt that line of thinking sounded silly, I still think so now.
The sad part is that even educated people still believe in such bunkum.

General increases in salary only increases the money in circulation and even some economist will argue that it has adverse effects on employment.
I think the emphasis should be on IMPROVED INFRASTRUCTURE, POWER , ACCESS TO HEALTH CARE, GOOD QUALITY ACCOMMODATION/EDUCATION AT AFFORDABLE PRICES, SECURITY etc. .

Increasing money in circulation will only benefit those who control the economy - THE RICH (yeah, you heard me right). The resources will still flow back to them.

They control the markets and the money ends up in the market, right ? ? ?

I remember way back then, My mum earned less than N400 per month, but guess what, she paid the school fees of like four kids, paid for accommodation (3 bedroom flat in lagos) and other living expenses with that salary. Now a N400 can only fetch you a plate of garri (not even enough for pounded yam).

I think (from my little knowledge of economy that the best situation will be to have little money in circulation but with a very high purchasing power. In that way, the impact of poverty will be felt less, cos little will achieve much).

I will so much appreciate contribution from seasoned/knowledgeable folks on economics. I am always willing to bow to superior knowledge.
but pls dont respond to this post with the line that senators are earning 100000000000000000000naira/second. Cos simply, if the earnings of the political class is too high, then simple solution is to have it decreased (seems more logical to me , or am I missing something here).
but to use that as a justification to increase the minimum wage of the remaining 100 million Nigerians is simply anarchy, Truth is at the end of the day, the percentage increases in their own paypack will always outstrip yours and the vicious cycle continues.

If the minimum wage was about ensuring parity between civil servants and their private counterpart (I have my opinions on this too but that's a topic for another day), then maybe the whole brouhaha might have some points.
but I dont think that's the goal anyway.


So I'll like to hear from you guys, I mean logical takes not just the sentiments or shouts of 'we are hungry, we are hungry'. I think we need a more intellectual approach.



PS: and I also think the agitation for the uniform implementation of the minimum wage across states is unfounded. I mean some days back i decided to get some condiments to fry eggs (dont mind me, I just love fried eggs)
and in the town where I am presently, N30 worth of tomatoes,pepper . . . was TOO MUCH, had to tell the seller to reduce it, that I didnt need that much.
That same set of goods will cost you about N150 in abuja (ain't kidding), so the issue is if the market realities in each and every locality is different, how do you now use the same yardstick to determine how organisations (both Govt and private) pay their staff. In the US, each state determines its own minimum wage so why not Nigeria, why not let each develop at its own pace.
Why should Katsina (for example) forced to keep up with Lagos or Ekiti forced to have the same policies as Adamawa. ? ? ?

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