This would help to stem inflation in nigeria which is usually caused by scarcity. Fg exempts minimum wage earners from tax by agencyreport. The paper then begins to fill the implementation research gap by identifying and qualitatively assessing a variety of minimum wage implementation mechanisms. A minimum wage is the lowest remuneration that employers can legally pay their employeesthe price floor below which employees may not sell their labor. Impact of national minimum wage increase on unemployment and inflation rates in nigeria. Section 5 deals with estimation and discussion of result. Evidence from vietnam nguyen viet cuong1 abstract it is often argued that minimum wage increases can lead to increased inflation. Data for the study is drawn from year 2005 national. The peak value of the minimum wage in real terms was reached in 1968. It employed the federal government national minimum wage from 1980 to. The impact of the national minimum wage on employment. Impact of national minimum wage on low income workers. Nigeria national minimum wage 20182021 data 20222023.
If government can bring inflation to manageable levels, reduce the cost of living, make education, health, housing and other infrastructure affordable, the issue of minimum wage will become academic. Why a higher minimum wage is good for small business. This research work investigates the impact of minimum wage fluctuation on growth of nigeria economy. The bill would effectively return the real value of the minimum wage to near the record high level of 1968 and keep it there through indexing. In a small number of countries, like nigeria and lao peoples. Minimum wage legislation has significant contractionary effects on the nigerian economy. Minimum wage policy and rural household welfare in nigeria. Nlc declares strike in 18 states over minimum wage. National minimum wage amendment act, 2011 a bill for an act to amend the national minimum wage act cap. This legislation affirmed that workers are entitled to a certain amount of compensation for their labor by instituting the first federal minimum wage in the united states. The trends of inflation rate and money supply in nigeria do not seem to move in the same direction. Within the nigeria economy, the effects of inflation includes expansion of production capacity, increase in employment levels, benefits the borrower, high interest rates.
In 2011, central bank of nigeria cbn data showed inflation at about 10. Empirical results indicated that inflation in nigeria proxied by cpi exhibited. Minimum wage in nigeria refers to the amount of remuneration all workers in nigeria are entitled to get after working for an organization for a period of time. Aug, 2020 minimum wage in nigeria 2020 current minimum wage update in nigeria. Most countries had introduced minimum wage legislation by the end of the 20th century. Your guide to the latest pay rise for lowpaid workers.
Impact of minimum wage fluctuation on growth of nigerian economy project material. Tipped workers are those whose compensation depends primarily on tips. The impact of minimum wage regulations on specific. If you give employees, who also are consumers, more wages to spend on goods and services, that creat. Since mid 1960s, inflation has become so serious and contentions a problem so serious and contentious a problem in nigeria. Jun 17, 2015 the median wage indexed minimum wage is higher today than the minimum wage indexed to the consumer price index because during the late 1990s and early 2000s nominal wages grew faster than inflation, resulting in real wage growth after accounting for inflation. Fg, nlc and minimumwage federalism the guardian nigeria. The national minimum wage act 1998 established a binding minimum wage across the uk, with the national minimum wage nmw taking effect on 1 april 1999. They are demandpull inflation, cost push inflation and wage push inflation. The politics of minimum wage implementation in nigeria iiard. The labor and the demand for a new minimum wage in. The impact of minimum wage regulations on specific population groups, as studied in industrial economies regan 1982, cunningban 1982, and linnerman 1982 is particularly relevant for developing economies. Although it did not name the states yet to honour the minimum wage, nlc said about half the 36 states of the federation were yet. There have been some studies on nigeria which investigated the effect of exchange rate depreciation a traditional cause of inflation on the countrys domestic inflation see for instance.
The impact of the minimum wage economic policy institute. Unemployment during democratic governance in nigeria. Suggest possible remedies for the delay or nonimplementation of minimum wage in nigeria. Although the nominal value of the minimum wage was. Impact of minimum wage fluctuation on growth of nigerian. In the longterm, the nigeria wages low skilled is projected to trend around 29200. The amount is a standard and cannot be altered directly or indirectly without the agreement of the national labour congress.
Onyeche and nseabasi 2017 define minimum wage as the lowest wage an employer is allowed to pay workers. In order to advise the government about the nmw, the low pay commission lpc, an independent body of employers, unions, and experts was established in 1997. Effects of the national minimum wage on unemployment and. Effects of the national minimum wage on unemployment and inflation free essays, effects of the national minimum wage on unemployment and inflation papers.
Here, the inflation rate will be the main criterion retained. Effects on spending for major health care programs the raise the wage act of 2021 would affect spending for the major federal health care programs. Mw legislations in the country have been preceded by high inflation rates that. The principal justification for minimum wage legislation has been the claim that it would improve the economic condition of low wage workers. New minimum wage structure in nigeria from 1978 to 2021. Some states and private sector companies have not yet raised their minimum wage to 18,000 naira for all employees.
In the leadup to the november presidential election, peoples action, a grassroots coalition, hired a dozen former staffers from sen. Consequently, the erosion in the real wages and salaries of. This came amid agitations from the national labour congress. Pwc estimates that nigeria would need an investment rate of at least 26% of gdp to achieve a growth of 7% global fdi flows fell by 19% in 2018. Inflation can only be reduced to the barest minimum by increasing output level gdp. Because minimum wages increase the cost of labor, many companies try to avoid minimum wage laws by using gig workers, moving labor to locations with lower. The living wage obviously differs from the minimum wage. Intrigues involved in new minimum wage for nigerian.
Apr 08, 2019 a similar wage increase in 2011 saw the inflation rate remain at doubledigit for two years thereafter, according to data from the cbn. Sign up to the newsletter to get every single tip from yahoo finances hour of power. However, the udoji committee which doubled the basic minimum wage in the public sector in 1975 represented a. Nigeria headline inflation rate trajectory united capital. Minimum wage is related to the inflation rate, but they are two separate things. Most previous analyses of the distributional effects. Sep 04, 2020 the national minimum wage for federal workers in nigeria reached 30 thousand nigerian naira in 2020, which equaled to about 77 u. Advertisement the industrial revolution was both a blessing and a curse. Bernie sanders ivt campaign to discuss the merits of populist economic proposals with voters in conse. The politics of minimum wage in nigeria asian economic. She reported evidence supporting spillover effects. N61 laws of the federation of nigeria, 2004 to provide for arevised national minimum wage and. An empirical investigation of the relationship between money. The minimum wage for those workers has long been different from the minimum wage for other workers.
The nigeria labour congress nlc yesterday directed workers in all the states where the national minimum wage of n30, 000 is yet to be paid to immediately proceed on strike. Minimum wages in nigeria is expected to reach 30000. Nigeria minimum wage world minimum wage rates 2021. If you havent already heard, australias lowestpaid workers are set to get a modest pay rise. There are 88 countries with a higher minimum wage then nigeria, and nigeria is in the top 45 percent of all countries based on the yearly minimum wage rate. Pdf the macroeconomic effect of minimum wage increase in. Wages low skilled in nigeria is expected to reach 28500. Organized labour in nigeria has presented a demand for a n52,000 minimum wage to the government.
The budgetary effects of the raise the wage act of 2021. Why does the minimum wage have no discernible effect on. In the longterm, the nigeria national minimum wage is projected to trend around 30000. If the minimum wage in that year had been indexed to the official. Determinants of labour market in nigeria arising from the economic transformation in recent years, and how public policy affects in particular labour market outcomes. Jul 07, 2020 according to a recent piece of economic research that examined the effect of prices on minimum wage increases in various states in the u. Determine the long run impact of national minimum wage increase on inflation rate in nigeria. In january 2021, the inflation rate in urban areas of nigeria grew by 17 percent compared to january 2020. The answer to that question can be trickier than you might think. The role actually played by the minimum wage in developing countries is. One small business owner argues paying employees more will actually level the playing field. The minimum wage trend and inflation dynamics in nigeria.
This paper examines the impact of minimum wage increases on inflation in vietnam during the 19942008 period. The labor and the demand for a new minimum wage in nigeria. National minimum wage increase has no short run significant impact on unemployment rate in nigeria. Though inflation rate is not new in the nigerian economic history, the recent rates of inflation have been a cause of great concern to many. Economic analysts say n30,000 minimum wage can hardly make up for the high cost of living of the average worker, with the current inflation rate at about 11. Up and down but mostly down for the last 50 years u. Imf sees higher nigeria inflation in 2020 on minimum wage. By all of the most commonly used benchmarks inflation, average wages, and productivity the minimum wage is now far below its historical level. Abdullahi and adamu ibrahim this study examined the dynamics of inflationary process in nigeria over the period 1981 2015, using the bounds testing approach to cointegration. Impact of national minimum wage increase on unemployment and. The second view is the pessimist thesis that argues that minimum wage is a political instrument in the hand of policy makers and politician to achieve political gains. Minimum wage laws are an important facet of labor rights, but the laws themselves can be complicated due to the fact that different minimums apply in different cities and states across the united states. Everything you need to know about the new minimum wage.
Facts and statistics about nigeria nigeria is a country located in the western africa region with a population of 111,506,000 and an average life span of 51. The history of the minimum wage in real terms and relative to other values. Do not quote macroeconomic effects of minimum wage in nigeria. Folawewo abstract this paper examines the macroeconomic effects of minimum wage mw policy in nigeria using a static computable general equilibrium.
The paper equally identifies and highlights that the battle is a battle about class disparity between the poor and the rich, the absence of institutional refuge for the. Jan 24, 2020 it is worth considering what the world would look like if this were the case. It affords the earner and his family the most basic cost of living. Finally, concluding remarks are contained in section 6. Analysis of inflation dynamics in nigeria 1981 2015 sani bawa1, ismaila s. Figure 1 shows the inflation adjusted minimum wage from 1955 to 1999, in 1999 dollars. Uniprojects aim of providing impact of minimum wage fluctuation on growth of nigerian economy project research material is to reduce the stress of moving from one school library to another all in the name.
Effect of inflation on the growth and development of the. May 05, 2019 in 2011 for instance, when the minimum wage was increased from n7,500 to n18,000, inflation rate actually dropped from over per cent the previous year to less than 11 per cent. Investigate the short run effect of national minimum wage increase on inflation rate in nigeria. Nigeria s minimum wage 18,000 naira per month,nationally with a month year as the law mandates an extra months pay for the christmas holiday. What the minimum wage would be if it kept pace with. In 1938, congress passed the fair labor standards act.
Analysis of inflation dynamics in nigeria 1981 2015. While the nominal minimum wage has not changed since 2009, changes in the economy and other factors have impacted those earning the minimum wage or less. Minimum wage is the amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract. In april 2019, president muhammadu buhari signed the new minimum wage bill into law amid rising living costs and poverty levels, thus increasing minimum wage by 62. Though theres a federal wage, there are different regulations and increases in different states, towns or counties, and even different rates for various sized companies. Nigeria s government may drive up inflation when it increases a sales tax to partly finance its record 2020 budget and implements a new minimum wage, the international monetary fund imf warned. Minimum wage hereafter mw legislation is a major income policy readily. An empirical assessment of the effects of minimum wage increases. If implemented, the 2019 wage increase may cause inflation rate to extensively exceed the cbns 12% projection and gradually erode purchasing power and value of the new minimum wage in the long term.
Get the whole scoop on minimum wage from its history to current debates. The rural inflation rate experienced an increase by 15. Macroeconomic effect of minimum wage in an oildependent. An empirical analysis abdurrauf babalola alhikmah university, ilorin, nigeria abstract this study examined the impact of national minimum wage increase on unemployment and inflation rate in nigeria. There have been three minimum wages changes from 1981 to 2018 in nigeria. While the nominal minimum wage has not changed since 2009, changes in the economy and other factors have impacted the minimum wage or below population. The effect of the minimum wage on prices iza institute of labor. Issues in national minimum wage fixing which predate nigeria political independence has caused very serious controversy and debate in the country thereby challenging the nature and structure of nigeria industrial relations system. Can new minimum wage increase inflation in nigeria. It employed the federal government national minimum wage. New minimum wage structure in nigeria from 1978 to 2021 all. Minimum wage is supposed to ensure that workers get paid enough to live.
Bolstering the bottom by indexing the minimum wage to the. Pdf macroeconomic effects of minimum wage in nigeria. Nigeria wages low skilled 2018 data 20202021 forecast. A national minimum wage for south africa 2016 recommendations on policy and implementation national minimum wage panel report to the deputy president. Inflation continues intensifying with the disproportionate cost of foods and living index increasing. Early rate through december 4 like everyone else under the sun, entrepreneurs are inclined to look out for. Theres no such thing as a standard minimum wage in the united states. Please, sit back and study the below research material carefully.
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