*Increased Minimum Wage: Just before you put yourself in a financial mess*
By
Paulinus I. Iyika, PhD, FCA

It is no longer news that the Federal Government of Nigeria has agreed to raise the Minimum Wage to N70,000. This is a whopping 133.33% increase from the current N30,000.
The purpose of this article is not to discuss the adequacy or otherwise of this amount but to educate as many workers out there who believe they will be receiving an increased monthly salary equivalent to 133.33%.

First of all, what is minimum wage?
Strictly speaking, the minimum wage is the lowest legal hourly pay that employers can give workers. This rate varies by country, state, and sometimes even by city. It is set by governments through enacting into law to ensure a minimum standard of living for employees.
However, national minimum as it is in Nigeria requires the Federal Government to set a flat rate for all employers both public and private sectors. This is in contrast to some countries where Sub-National governments are allowed to fixed wages. In the US for example , some states have minimum wages higher than the federal government.

Back to the main issue.
I came across a formula making the round on social media which is misleading. According to the formula, everybody should expect a 133.33% increment.
X=(a*b)/c

Where :
X =New salary (based on b)
a=Current salary
b=new minimum wage
c=current minimum wage

Hence , an employee on #52,000 should expect about N121,000.

This is utterly misleading and it will be important to clarify this in order to manage expectations. Don’t begin to spend money that does not and will never exist.

For those on the lowest rung of income level, say those on GL 1 for example who earn the lowest or some persons in private sector say cleaners, etc. , the expectation is higher because they are the most hit in the economy.

However, as the grade level increases, the incremental effect reduces across board. At the end, someone earning say #300,000 will not get same percentage increment like someone at the lowest level. Applying same rate of increase will normally lead to #699,999 for someone earning #300,000 presently.

The responsibility to determine the variations across board is domiciled with the National Salaries Income and Wages Commission(NSIWC). They will carry out consequential adjustment which refers to the revisions in the salary structure across various levels of employment that follow an increase in the minimum wage. When the minimum wage is increased, it doesn't only affect the lowest-paid employees; it also necessitates adjustments for higher salary brackets *to maintain wage differentials and ensure equity within the pay structure*.

The consequential adjustment typically involves:

1. *Review of Salary Structures*: The NSIWC reviews the entire salary structure of the public and private sectors to determine how the new minimum wage affects different pay grades.

2 *Maintaining Wage Relativity*: Ensuring that the new minimum wage does not compress the wage structure, meaning that pay differentials between various grades and levels of employment are maintained. This helps in preserving the incentives for career progression and maintaining motivation among higher-skilled workers.

3 *Incremental Adjustments*: Incremental adjustments are made to the salaries of employees in different grades. These adjustments are calculated to ensure that each grade receives a proportionate increase that reflects the rise in the minimum wage.

4 *Equity and Fairness*:
Ensuring that the salary adjustments are fair and equitable across all employment levels. This involves making sure that the salary increases are proportionate and justified based on job responsibilities, experience, and qualifications.

5. *Budget Impact Analysis*: Assessing the financial implications of the salary adjustments for employers, particularly in the public sector. This includes determining how the increased wage bill will be funded and its impact on government budgets and spending.

6. *Negotiations and Consultations*:
Engaging with labor unions, employee representatives, and other stakeholders to negotiate and agree on the new salary scales. This helps in achieving consensus and minimizing disputes.

7. *Implementation Timeline*: Establishing a timeline for the implementation of the consequential adjustments. This includes setting dates for the adjustments to take effect and ensuring that all parties are aware of the changes.

9. *Compliance Monitoring*: The NSIWC monitors compliance with the new salary structures to ensure that employers adhere to the adjustments and that employees receive their due increases.

In summary, consequential adjustment by the NSIWC ensures that an increase in the minimum wage leads to a comprehensive revision of the entire salary structure, maintaining fairness and equity *while considering the financial capabilities of employers*.

*Do not build castles in the air* !

NB: The opinion expressed here are entirely mine and not the organization I represent. It is also aimed at educating not for advisory purposes.

Minimum wage + 10%(minimum wage)
= 60k + 6k
= 66k

Access bank, check your app/account balance. Salary has been paid

Ok, you have been served your breakfast, e remain state chairmen.

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dencydenky2:
Pls, those of us on pension scheme should throw more light on the need to join, especially for those of us with keen interest to join the scheme.
Seeing a comment of regret coming from one already in d scheme is thunder striking and discouraging for whomever wants to join.
Thanks as I wait for your responses.

Any civil servant retiring now should not expect Gratuity from the Govt.
Pension is now contributory. What you contributed/saved, is what you get at the end of your service year ( Rivers State New pension law).
A senior colleague who retired late last year, retired without hope of getting gratuity.

Any staff who is not on the scheme, is not doing himself any good, or the staff don't intend to stay long in the service/job.

The scheme is good, our monthly deduction/contribution is invested and the interest is also accrued to our account.

You can access your account online, just as you access your bank account.

According to what we were told in one of their seminars, we can access upto 50% of our savings/contribution when we clocked the age of 50.
You can DYOR.

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When Emefiele unconstitutionally detained millions of Nigerians in this country, you were not there.

dmercy141983:
URGENT!

A private school in port Harcourt is offering to Oay #200,000 per month, please with all sincerity will you quit this government job you have to take up this offer?

Answer objectively to help someone make a destiny changing decision please. Thanks!

Look for someone to stand in for you in the public school. Let your Principal know about it( tell your principal, you want to further and you'll not be available). Go for the Private school, teach for some time, raise money, go into biz and return to your Govt. School.

For those who need their new access bank account number, do an email to ContactCenter@accessbankplc.com requesting your new/alternate account number. Provide them with your old (diamond) account number, account name and phone number. Good luck and season's greetings.

This is vote buying if you ask me

Do Kano voters know what is credential?

A colleague sent this to me this morning