Several months ago the Nigerian government passed into law a new minimum wage which stipulates that the least paid workers shall earn N18,000 ($120) monthly.
This was a leap from the previous minimum wage of N7, 500 ($50). As paltry as the new minimum wage may seem, especially when exchanged to the dollar there are several effects or repercussions (if you like) that the new minimum wage law will have on the Nigerian Labour Market. In a country where thousands of graduates are still unemployed more spending on the part of employers (private and public) will certainly cause some adverse effect.
• Employers Will Spend More and Hire Less: When a Company or State government has to more than double its wage bill then be sure that they’ll do far less hiring than before. We think that the new minimum wage will cause lesser job vacancies especially in the public sector where the labour union is fighting to get the law adhered to. If the labour union also goes to insist that private businesses pay the minimum wage then there will be serious decrease in availability of new jobs as not every private business can afford to pay the new wage structure and still hire new people every year.
• Organization Will Hesitate to Hire People With Too Much Academic Qualifications: based on the new minimum wage structure, salaries for each level of workers has more than doubled this means that hiring people with bigger qualifications may mean paying bigger salaries. This may be a disadvantage to the Masters’ degree holding job seekers.
• More Workers May Join the Public Sector: from all indications the new minimum wage structure will be more adhered to buy public sector institutions as a result of labour unions struggles. If that happens expect more people to want to work in government institutions and agencies.
• Job Will be Scarce in the Public Sector: and as a direct result of the above, jobs will be far more difficult to get in the public sector. People tend to rush towards lucrative job sectors. This can already be seen by the rush for application when government parastatals such as National Draw Law Enforcement Agency (NDLEA) advertise vacancies.
• More Money, Higher Inflation: though I may not be an economist but since there is certainly going to be more money in the system without commensurate productivity, inflation sets in.