BY IBRAHEEM KHALEEL
YALWA
Department of Economics, Bayero University, Kano
4/11/2018
Agitation for pay rise by national labour congress(N.L. C.) started some years back, due to persistence increase in prise of good and services{INFLATION} which is eating dip into the labours salary, consequently reducing there purchasing power, which make them adjust there purchases of necessity goods, inflation ins't a new phenominan in nigeria,it do occur from time to time, but the resent one reach an unprecedental level, while government in Nigeria has set a minimum wage of 18 thousand which large number of nigerian workers receive as there salary at the end of each month, this little money cannot buy even a single bag of rice talkless of otther necessities due to excessive level of inflation in the country, recently the agitation for wage increase arise again, this time around the N L C demand a wage increase from 18 thousand to 30 thousand, in an effort to resolve the matter, federal government after it consult it economic team has proposed 24 thousand as new minimum wage, while 22500 has been proposed by states governments as new minimum wage , and N L C under the chairmanship of Ayuba Wabba has proposed 30 thousand as a new minimum wage which if not meet the N L C vow to embark on an indefinite strike on November 6 which as a result valuable man hours will be lost and the country will loss millions of dollars.this problem can only be solve by the use of economic ideas as well as well design economic policies.
Been an economic student i will like to share my view on this issue and try to suggest the way out with the little knowledge i have on the concept of economics, increasing the minimum wage to any amount implies an indirect increase in money supply or what is known as expansionary monetary policy which will lead to increase in price of good and services as explain by famous classical economics Irvin Fisher, the Fisher's explanation shows that as the money supply increase the price of good and services will also increase in equal proportion or otherwise due to neutrality of money, because price is solely determine by money supply.
Rough data of nigeria's population stand at 180 million out of which only 20 to 25 percent are civil servant, the remaining percentage are not in the government or any private institute pay role, so the decision to increase the minimum wage or not has to consider the two different categories of people in order not to improve the living standard of one category{wokers} and jeopardize the life of the remaining one, the following suggested policies can be implemented to solve this problem economically.
1. INCREASING THE MINIMUM WAGE AND IMPLIMENTING THE PRICE CONTROL POLICY.
increasing the minimum wage to any desired amount will increase the purchasing power or disposable income of the wokers as well as aggregate demand, economically this will increase the purchase of good and services . I know some may say this is an expantionary monetary policy which is not effective during inflation which is still lingering in the Nigerian economy, then how can i suggest such a policy , of course i will because the increase in inflation level can be curtail if the government strictly adopt the price control policy, a policy through which government regulate the price of goods and services with the aim of arriving at reasonable price which is favorable to both buyers and sellers, if to say this policy will be implemented a level ground will be reach between the N L C and the government which will prevent the treat of indefinite strike which the N L C vow to embark upon if there proposed 30 thousand minimum wage is not meet, the situation which will course damage and loses to the country.
2. REDUCING THE TAX RATE OF THE EMPLOYEES AS WELL AS ADOPTING THE PRICE CONTROL POLICY.
This policy can also be use to settle down the problem of new minimum wage between government and N L C, government can either use fiscal or monetary policies to solve problems in the economy, tax is an instrument of fisal policy which if effectibly use can solve this problem of wage increase in the following way, as increase in the minimum wage increase the purchasing power so also reducing the tax rate increase the disposable income this will letter increase the purchasing power of the workers which is what the N L C is demanding so both the two suggested policies has the same implication on the workers but done in different ways , but care most be taking because if one of the two policies is implemented with out a proper price control policy there will never be a change as far as increase in minimum wage is concern, for example if federal government increase the minimum wage to 30 thousand with out implementing price control, inflation level will rise again which will letter make the increase in minimum wage to be equal or even lower than inflation level, a situation which will not be good to both workers as well as the remaining populace, because any decision taking economically has a trickle down effect which may or may not be good defending on how the decision is taking, advisibly instead of increasing the minimum wage its better to have an effective price control policy, this is all i can say with the little knowledge i have on the concept of economic, but who ever has a suggestion, observation or correction you are most welcome.
I remain My Humble Self IBRAHEEM KHALEEL YALWA
DEPARTMENT OF ECONOMICS,
BAYERO UNIVERSITY, KANO
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