The Association of Local Government of Nigeria (ALGON) has voiced apprehension regarding the proposed N62,000 minimum wage, warning that its implementation could significantly strain the financial capacities of local councils across the country.
Recently, the Federal Government cautioned organized labor about the broader economic ramifications of pushing for what it termed an unrealistic hike in the national minimum wage. Minister of Information and National Orientation, Mohammed Idris, emphasized that the suggested N250,000 minimum wage demand by labor unions could potentially destabilize the economy, trigger mass layoffs, and jeopardize the welfare of Nigerians.
Contrary to President Bola Tinubu’s assertions during his Democracy Day address that an agreement had been reached on the new national minimum wage, labor unions disputed this claim.
Speaking on a monitored program on Thursday, ALGON National President Aminu Muazu-Maifata expressed skepticism about the feasibility of local governments meeting the proposed N62,000 minimum wage. He highlighted that many of the 774 local government areas (LGAs) are still grappling with the payment of the current N30,000 minimum wage approved in 2019.
"The current allocation from the Federation Account is inadequate for local government councils to meet the proposed N62,000 minimum wage," Muazu-Maifata stated. "Currently, approximately 90% of our revenue from the Federation Account is allocated to salaries and pensions. Without a revision in the allocation percentage to local governments, it will be exceedingly challenging, if not impossible, to meet the proposed wage increase."
He further elaborated, "Local government councils presently receive slightly over 18% of the total Federation Account Allocation Committee (FAAC) funds, whereas the federal government receives over 52%. Some councils are still struggling with the N18,000 minimum wage and have not yet fully implemented the N30,000 wage. With the current allocation structure, local governments simply cannot afford an increase to N62,000."
Muazu-Maifata, who also serves as chairman of Lafia Local Government in Nasarawa State, emphasized that local governments shoulder numerous responsibilities beyond salary payments. He advocated for a comprehensive consideration of these obligations when evaluating the affordability and sustainability of any proposed minimum wage increase.
In conclusion, Muazu-Maifata underscored that should the proposed minimum wage legislation be enacted, local governments would have to seek financial assistance from governors and the Federal Government to bridge the funding gap.
