Reflections with Ubong Usoro : Minimum Wage: Matters Arising
A very wonderful week to you. I am sure you are still in the euphoria of the New Year. This week
we will be taking a look at Minimum wage,the advantages and disadvantages and how it can
affect the ordinary citizen. Since the are cries by the masses for government to increase
the minimum wage of workers. Get hooked.
Minimum wage is the lowest remuneration that employers can legally pay their workers.
Equivalently, it is the price floor below which workers may not sell their labor. Although
minimum wage laws are in effect in many jurisdictions, differences of opinion exist
about the benefits and drawbacks of a minimum wage. Supporters of the minimum
wage say it increases the standard of living of workers, reduces poverty , reduces inequality,
and boosts morale. In contrast, opponents of the minimum wage say it increases
poverty, increases unemployment (particularly among unskilled or inexperienced
workers) and is damaging to businesses, because excessively high minimum wages
require businesses to raise the prices of their product or service to accommodate the extra
expense of paying a higher wage.
HISTORY OF MINIMUM WAGE
Modern minimum wage laws trace their origin to the Ordinance of Labourers (1349), which
was a decree by King Edward III that set a maximum wage for laborers in medieval
England. King Edward III, who was a wealthy landowner, was dependent, like his
lords, on serfs to work the land. In the autumn of 1348, the Black Plague reached
England and decimated the population. From where it has spread to other countries like Nigeria.
ADVANTAGES OF MINIMUM WAGE
Here I state some of the advantages of minimum wage
1. Helps Families
The Economic Policy Institute is an economic research group located in Washington, D.C. and it concluded in a 1999 study that nearly 40 percent of the minimum wage earnersare working parents. To go even further, nearly 33 percent of the minimum wage earners are married couple raising children. Without a minimum wage, these workers may be forced to work for less money. And they may not be able to support their children and family effectively this can in turn lead to corruption, as they workers will be tempted to steal at the slightest opportunity to make up for their poor pay.
2.Reduces Tax Burden
A person making at least minimum wage is not using as many public services as someone on unemployment, according to economics expert Professor Brock Haussamen. An unemployed
worker is given welfare, rent assistance and food stamps in many states. With minimum
wage, the need for public assistance is lowered and this reduces the tax burden on the
community and the state.In the case of Nigeria, a person on minimum wage will likely borrow less and will render help to family members and other effectively.
A minimum wage gives an unemployed person incentive to take a job because he knows what
his minimum pay will be, according to economics website Economics Help. An
unemployed person can compare the money he gets from public assistance and compare it to
the minimum wage to determine the financial incentive to taking a job. And will be able to gladly decide if the job is favourable or if he should continue to stay unemployed.
Without a minimum wage, it can be difficult for small businesses to budget their money. With a
minimum wage in place, a small business owner knows what he will be expected to pay
per hour and he can create new jobs with his company based on this budgeting information.
5. Common Reference
The minimum wage makes the hiring processeasier for young or unskilled workers and
employers. The worker knows upfront what kind of wage she can expect, and the employer does not have to go through the process of negotiating a wage with a new employee.
DISADVANTAGES OF MINIMUM WAGE
1. Unemployment. If labour markets are competitive, a minimum wage could
cause unemployment because firms will demand less labour, and higher wages may
encourage more workers to supply their labour without a second thought.
2. Firms may become uncompetitive. In some cases, a higher minimum wage could push up costs causing a firm to go out of business because they may not be able to
afford wage costs. This might be a particular problem if the firm is competing in a global
market and higher wage costs make themuncompetitive compared to low-wage cost
countries. For example, a higher minimum wage may encourage firms to manufacture
clothes Aba or Uyo where labour is cheaper than Lagos.
3. Cost-push inflation. A minimum wage can cause cost-push inflation. This is because
firms face an increase in costs which are likely to be passed on to consumers. This is
even more likely if wage differentials are maintained.
4. Black market. A minimum wage may increase the number of people working on
the black market so firms can avoid paying the legal minimum wage, especially in a country like Nigeria where anything can happen.
5. Poorest don’t benefit. A limitation of the minimum wage is that it doesn’t increase the
incomes of the lowest income groups. This is because the poorest have to rely on benefits and
are therefore not affected by minimum wages.
6. Limited impact on relative poverty. Many who benefit from the minimum wage are
second income earners, and therefore the household is unlikely to be below the poverty
line. A household with a single income earner just above the minimum wage is likely to be
relatively poorer. But they will not benefit from the minimum wage.
THOSE WHO MAY NOT BENEFIT FROM THE MINIMUM WAGE
1. Babysitters on a casual basis
2. Companions for the elderly
3. Federal criminal investigators
4. Fishing workers
5. Homeworkers making wreaths
6. Newspaper delivery workers
7. Newspaper employees of limited circulation newspapers
8. Seamen on foreign vessels
9. Switchboard operators
10. Farm workers employed on small farms
11. Employees of certain seasonal amusement and recreational establishments etc
THE NIGERIA SITUATION
Nigerian workers have gone through a long journey to get a decent minimum wage, which the Senate passed on Tuesday, February 22, 2011 started long
before the late President Musa Yar’Adua, on July 14, 2009, through the then Secretary to
the Government of the Federation, Alhaji Mahmud Yayale Ahmed, inaugurated a
tripartite Presidential Committee on National Minimum Wage, headed by Chief Justice Alfa
The Belgore Committee, set up after Labour and its Civil Society allies began nationwide
rallies and march protests on new minimum wage, planned full deregulation of the
downstream sector of the petroleum industry and implementation of Justice Uwais National
Electoral Reform Commission, NERC. Leaders of Nigeria Labour Congress, NLC, in December 2008, after a report of an internal committee it set up look to work outappropriate minimum wage, publicly demanded for N52,.200 minimum wage for workers, which was never implemented. Looking at the Nigerian situation, I support the increase of minimum wage of workers to something reasonable, so that the average man can survive, become the N18,000, is no longer beneficial looking at the high cost of living.
Keep a date, see you next week.
Comrd Ubong Usoro
Ubong Writes for The Nigerian Voice, He lives in Uyo.