Government orders payment of new minimum wage from April 18

• Directs commission to clear arrears latest Dec 31
• New pay, personnel costs to take N4.88tr in 2020
•Lawan, Gbajabiamila decry disruption of budget cycle

Full payment of the new minimum wage to Nigerian workers takes effect from April 18, 2019.

The Federal Executive Council (FEC) presided over by Vice President Yemi Osinbajo issued the directive yesterday in Abuja.

The approval followed an earlier agreement between organised labour and the Federal Government on the consequential adjustments.

In the adjustments agreed upon by the labour stakeholders, workers on grade level 07 will henceforth receive a 23.2 per cent increase in their salaries, those on grade 08 will get 20 per cent increase, level 09 (19 per cent), levels 10 to 14 (16 per cent) and levels 15-17 (14 per cent).

Minister of Labour and Employment, Dr. Chris Ngige, while briefing State House correspondents on the development, said FEC had already asked the National Salaries, Incomes and Wages Commission to effect the payments, including arrears owed workers, reflecting the consequential adjustments.

He said a deadline of December 2019 was also set to effect all payments while the benchmarks would be forwarded to state governments to guide them in their own implementation.

According to the minister, government settled for April 18 since it was the date the new minimum wage was signed.

“FEC also approved for us that the financial implication is worked out and the payment should be completed in or before December 2019. Council further directed that the minister of finance budget and national planning, through the office of the accountant general of the federation should affect all these payments before 31 December 2019.

“Council further directed that the National Income and Wages Commission and the Ministry of Labour and Employment should send the consequential adjustment table down to the states and local government as an advisory document for their information and guidance for their national joint public service status in their respective states because the national minimum wage is a national law,” Ngige said.

Meanwhile, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has disclosed that the Federal Government is to spend N4.88 trillion in actuallizing the new national minimum wage as well as other personnel costs in the 2020 fiscal year.

She made the disclosure during a public hearing on the 2020 budget estimates at a joint session of the Senate and House of Representatives.

Ahmed informed the lawmakers of the projected investment of N10.33 trillion in Government-Owned Enterprises (GOEs)/bilateral/multilateral project tied loans/expenditures.

According to her, the proposed budget deficit for 2020 pegged at N2.175 trillion (1.52 per cent of the GDP), would be funded mainly by borrowing of N1.594 trillion, comprising N744.99 billion domestic sources and N850 billion foreign sources (more concessionary financing against commercial financing arrangement.)

On debt servicing, the minister indicated that the Federal Government proposed N2.5 trillion, representing 23.74 per cent of target expenditure for the incoming fiscal year, and N296 billion for the retirement of maturing bonds to local contractors, representing an increase of 169.09 per cent from N110 billion for 2019.

Ahmed affirmed that the country achieved 58 per cent of its revenue target in the second quarter of 2019.

She gave the breakdown of the actual revenue that accrued to government’s coffer between January and June 2019, indicating that N900 billion (49 per cent) was from oil; N349.11 billion (86 per cent) from company income tax; N81.36 billion (71 per cent) from Value Added Tax (VAT) while N184.10 billion (100.47 per cent) was from customs collections. “Fiscal deductions by NNPC for federally funded projects also exceeded target.”

Of the total appropriation of N8.92 trillion, she said N3.39 trillion had been spent as of June 2019 against the prorated expenditure of N4.58 trillion, representing 76 per cent performance while N294.63 billion had been released for capital projects as at 30th September 2019, despite the late signing of the budget on 27th May 2019.

According to Ahmed, the 2019 actual GDP stands at 2.02 per cent against the proposed 3.01 per cent in the budget; 1.86mbpd of oil production against 2.3mbpd; $67.2 per barrel against the proposed $60 per barrel while the actual inflation rate stands at 11.4 per cent against proposed 9.98 per cent and exchange rate stands at N305.9/$ against the proposed N305/$ at half year.

The minister indicated further that the 2020 budget estimates reflected the adjustments to the MTEF/FSP with respect to the oil benchmark price of $57 per barrel from $55 per barrel and Customs revenue target raised to N1.5 trillion, an increase of N557.4 billion of which N235.5 billion is available to fund the Federal Government’s budget.

She assured the lawmakers that debt servicing and the implementation of non-debt recurrent expenditure, notably payment of workers’ salaries and pensions, were on track.

She said spending on four critical sectors, namely power, roads, rail, and agriculture, were of top priority.

Ahmed, who expressed concern over the rising personnel cost including pension costs above N3 trillion, however, said that steps were being taken to “contain the rising personnel costs, including an October 2019 deadline by Mr. President for all MDAs to implement IPPIS.”

As contained in the 2020 budget estimates, the minister explained that MDAs were to roll over 60 per cent of the 2019 projects due to paucity of funds in the current year.

Chairman, House Committee on Appropriation, Muktar Betara, explained that the public hearing was aimed at making it an all-inclusive process in the task of national development.

“As always, the enormity of demands translated to projects and huge capital can hardly match available resources. This is the more reason we in the National Assembly, and particularly in the House of Representatives, will always do our utmost best in thoroughly processing the national budget,” he remarked.

At the event, Senate President, Ahmad Lawan, said Nigeria failed in its national planning over some years due to irregular budget cycle.

Lawan said that the hearing was special because it was another important step in a bid to resolve the undesirable budget cycle.

He added: “This cycle has created problems for planning and for the proper implementation of the nation’s macro-economic framework which needs to be reasonably predictable, the way it happens in other climes. It is when the framework is predictable that it can positively influence the micro details in the budget proposal.

“The 9th National Assembly is committed to correcting this anomaly in the budget cycle. As legislators, we have set out to be exemplary in the fulfillment of our core functions, which includes legislation, representation, and oversight.”

The Speaker of the House of Representatives, Femi Gbajabiamila, also said the departure from January to December budget circle had been degrading the economy.

“To appropriate, we can’t do it alone. A budget of a country is the basis on which everything is built. And this is the first time we are seeking an outcome that will clearly reflect the true federal character of Nigeria. No South, East, West or North,’’ he stated.

“I commend the executive for bringing the budget early after a long time. It has come early and we are doing this to go back to January December budget circle.”