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NYSC bill to jump to N528bn annually with the new minimum wage

The Tripartite Committee for the new minimum wage is yet to decide on a figure, with options currently between N62,000 and N250,000. However, a major consideration is that about 400,000 graduates join the mandatory National Youth Service Corp annually. If the minimum wage is set at N100,000, with the federal government paying corps members 10% more than the minimum wage rate, the total annual payment to corps members would rise to N528bn, a 233% increase from the current N158.4bn.

Another key concern is the distinction between minimum wage and general wage which could prompt broader wage negotiations after setting the new minimum wage. An increase in wages will raise the purchasing power of lower and middle-income populations, leading to higher consumer spending and increased turnover for businesses. However, increased wages pose risks such as inflation, potential layoffs by businesses, and fiscal strain on governments.

Fiscal stimulus to the rescue

Straddled with inflation at a 30-year high, which dampens consumer demand, and record high monetary tightening that raises the risk of loan defaults, the Nigerian economy is hanging by a thread. This situation undoubtedly requires intervention to mitigate these effects and provide an economic social safety net for households, firms, and small businesses. Fortunately, the federal government is set to announce a comprehensive fiscal stimulus package focused on reducing inflation and revitalizing key sectors.

While the fiscal stabilization package is expected to bolster the Nigerian economy, there is skepticism about its potential impacts, given the nation’s history of poor policy implementation. Additionally, it is imperative to note that stimulus packages are short-term measures. Sustainable and accelerated growth will require debottlenecking the economy through targeted structural and institutional reforms.

In this latest edition of Prism, the FDC Think Tank takes a deep dive into recent economic developments and their impact on your business and corporate strategy.

Enjoy your read!