With tensions subsiding over the minimum wage, concerns linger about the financial burden on governments and the private sector. President Bola Tinubu recently signed the new minimum wage bill into law, setting a national minimum wage of N70,000 and allowing for renegotiation every three years.
The new wage law comes at a significant cost to employers, with the Senate approving a supplementary budget of N6.2 trillion to support the increase. This raises the total budget to N35.5 trillion, adding to the existing deficit and debt servicing obligations. Nigeria spent N7.8 trillion on debt service in 2023, a substantial increase from previous years.
To address the challenges posed by the minimum wage increase, the government must cut costs, tackle insecurity, and invest in infrastructure to attract foreign investments. States, in particular, need to focus on improving their revenue generation and prioritizing sustainable economic development projects to avoid financial crisis.
In conclusion, while the minimum wage hike is a welcome development for workers, it presents significant challenges that require careful economic management and strategic planning to ensure long-term sustainability.
