• Organised private sector groups have warned that many businesses cannot automatically adopt a N100,000 minimum wage
• Employers say SMEs are already struggling with inflation, high energy costs, and declining profit margins
• Business leaders urged the government to focus on lowering the cost of doing business and reducing inflation rather than imposing unsustainable wage obligations

Nigeria's organised private sector has expressed concerns over growing calls for a N100,000 minimum wage, warning that many businesses, especially small and medium-sized enterprises (SMEs), may be unable to sustain such a pay increase under current economic conditions.

The concerns come amid discussions surrounding a possible review of the national minimum wage and decisions by some state governments to raise workers' salaries to N100,000.

Business leaders acknowledged that the rising cost of living has increased pressure on workers and employers alike.

However, they argued that any wage adjustment must reflect the realities facing businesses across different sectors of the economy.

President of the Lagos Chamber of Commerce and Industry (LCCI), Leye Kupoluyi, said private sector employers should not be compelled to adopt the same wage levels approved by governments if their financial circumstances do not permit it.

"National minimum wage does not necessarily mean private sector operators must pay their workers the same level if they cannot afford such a level at the time of introduction," Kupoluyi said.

According to him, businesses are already dealing with multiple cost pressures, including energy expenses, infrastructure challenges, and operational difficulties that continue to erode profitability.

Kupoluyi also called on the government to address structural challenges affecting businesses, including poor road networks, support for strategic industries, and improved fuel supply for local refineries.

He warned that rising debt servicing obligations could further limit government spending on critical infrastructure.

Similarly, the Director-General of the Nigeria Employers' Consultative Association (NECA), Adewale Oyerinde, said although the proposed increase appears reasonable considering current economic realities, it cannot automatically become binding on private sector employers.

"We commend the state governments for proposing the increase of the minimum wage to N100,000. This seems plausible in view of the biting economic situation," Oyerinde said.

However, he stressed that the process for determining a national minimum wage should follow established tripartite negotiations involving government, employers, and labour unions.

"While the government can, at a bipartite engagement with the unions, agree on what the wages would be, that cannot be binding on the organised private sector," he added.

Oyerinde further argued that reducing the cost of living through economic reforms would have a more lasting impact on workers' welfare than what he described as an unsustainable wage increase.

The National Vice President of the National Association of Small-Scale Industrialists, Segun Kuti-George, echoed similar concerns, noting that while the proposed wage increase may be beneficial for public sector workers, it presents significant challenges for private businesses.

"Whereas it is good for the public service, the private sector should not be constrained to follow suit," he said, pointing out that many micro, small and medium enterprises are already grappling with rising production costs and shrinking profit margins.

President of the Association of Small Business Owners of Nigeria (ASBON), Dr Femi Egbesola, also noted that the ability to implement a N100,000 minimum wage would vary significantly among businesses.

According to him, larger companies may be able to adjust their wage structures to remain competitive and retain skilled workers.

However, many SMEs are struggling with inflation, weak consumer demand, high energy costs, and other operational challenges.

"For such businesses, an immediate increase to N100,000 may be difficult to sustain," Egbesola said.

He urged policymakers to focus on creating a more supportive business environment that would enable employers to improve wages sustainably while preserving jobs.

Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said wage realities differ widely across sectors.

He noted that industries such as oil and gas, financial services, and information technology already pay salaries significantly above N100,000, with some organisations offering minimum monthly wages between N150,000 and N200,000.

However, Yusuf said the situation is very different in sectors such as manufacturing, agriculture, education, hospitality, and retail, where businesses continue to battle rising operational expenses.

"For many small businesses, it is a struggle to even keep the business afloat. That is the reality," Yusuf said.

He added that many enterprises are still finding it difficult to comply with the current N70,000 minimum wage due to soaring energy costs and weak consumer spending.

"Many of the small businesses will have to struggle to be able to meet this N100,000. Even the N70,000, many of them are still struggling to pay it because they can't give what they don't have," he stated.

Yusuf further warned that businesses operating in rural communities could face even greater difficulties because of lower purchasing power and limited revenue opportunities.

Overall, private sector leaders agree that improving the business environment, reducing production costs, and tackling inflation would provide a more sustainable path to improving workers' welfare than imposing wage levels that many businesses may be unable to sustain.

Lagos NLC demands N225,000 minimum wage as inflation squeezes workers

Meanwhile, TheRadar earlier reported that the Nigeria Labour Congress Lagos State Council had asked the Lagos State Government to raise the minimum wage for workers from N85,000 to N225,000, warning that the current pay can no longer match the realities of living in the state.

According to the union, the current wage structure no longer offers enough protection for workers battling rising living costs in Lagos.