The Central Bank of Nigeria, CBN, has thrown its weight behind organised labour’s quest to increase the minimum wage, saying that it would boost the economy.
CBN Governor, Mr. Godwin Emefiele, disclosed the apex bank’s position while briefing the press on the outcome of Monetary Policy Committee, MPC, meeting, in Abuja.
Emefiele, who warned Deposit Money Banks against lending to politicians or abetting money laundering as campaigns for the 2019 general elections, expressed optimism that the proposed increase in the nation’s minimum wage would boost the economy through increased aggregate demand.
Meanwhile, the House of Representatives Committee on Labour, Employment and Productivity said that the National Assembly would give the minimum wage bill accelerated hearing and passage whenever it was presented by the executive arm of government.
The federal and state governments are still ironing out the issue of N30,000 minimum wage which the Tripartite Committee recommended to government, but which state governors disagreed with, saying they could not pay unless workers were sacked or their allocations increased.
President Muhammadu Buhari had on November 27, set up a 30-man National Minimum Wage Committee, headed by a former Head of Service of the Federation, Ms. Ama Pepple. The committee had recommended N30,000 minimum wage for workers but state governors, who argued that they were not carried along, insisted it would be impossible to implement the proposed new minimum without reducing their workforce.
Minimum wage’ll boost demand
Expressing optimism that increased minimum wage increase would boost the economy, Emefiele said: “Given the negative output gap, the proposed increase in minimum wage would increase aggregate demand, it will stimulate output growth after the prolonged weak aggregate demand which was due to salary arrears and contractor debts.”
On possible inflationary impact of increased money supply due to increase in minimum wage, the CBN boss stated: “It’s impact on aggregate price level would be likely muted, given that aggregate demand has largely under-performed in the fiscal year of 2018.”
The CBN boss reiterated that the economy’s recovery from recession was tepid and that efforts should made to step up domestic aggregate demand through banks giving more access to credit to high employment generating sectors, with particular emphasis on Small and Medium Enterprises, SMEs.
This, he said, would be achieved with improvement in productivity in both the oil and non-oil sectors of the economy, improvement in harvest, exchange rate stability and addressing security challenges across the country.
The downside of the economic outlook, according to Emefiele, include reduced portfolio investment inflows, absence of fiscal buffers, low domestic credit and weak aggregate demand.
He, however, added that there would be an increased inflationary pressure towards the end of the year, largely due to consumer spending for the Christmas festivities, election-related spending and increased spate of implementation of the 2018 Federal Government budget.
The CBN boss indicated that access to foreign exchange for the importation of products that could be produced locally would be made more stringent. The, MPC, he said had advised that the Anchor Borrowers Programme be extended to sectors such as fish and palm oil, with a view to replicating the success story that the programme had come to be associated with in the production of rice, among other items.
Funding 2019 election campaigns
On 2019 polls campaigns, the CBN governor asked banks to be wary, saying “we have had meetings with the banks and we have told them to be very careful and wary. Money laundering issues may arise and having advised them to be very careful of money laundering issues, I believe they will be careful themselves, because they have been told that if they are caught on issues like this, they will be very heavily penalized. “On lending, of course, when you say banks lending to politicians, banks have their risk acceptance criteria and I don’t think banks will do that at this time. Everybody must have learned their lessons and conduct their businesses well. But we at the CBN are waiting and watching and if things go wrong, or about to go wrong, we will deal with it as appropriately as possible.”
NASS will accelerate passage of minimum wage bill – House Committee
Meanwhile, Chairman of the House of Representatives Committee on Labour, Employment and Productivity, Ezenwa Onyewuchi, told the News Agency of Nigeria, NAN, that the National Assembly would give the minimum wage bill accelerated hearing and passage. Onyewuchi, who represents Owerri Municipal/North/West Federal Constituency of Imo State, said when the minimum wage amendment bill is sent to them by President Buhari, the National Assembly would do the needful.
“For us, we have to wait here until the President sends in the amendment bill; it will go through the rudiments of lawmaking; pass through the committees at various levels.
We know how important it is; we know that the workers are desirous of wage increase, especially the minimum wage, which for me as a committee chairman, I consider important,” he said.
The lawmaker said although the bill would not escape normal legislative scrutiny, he assured that it would be given expeditious passage. “For me, we want a living wage, a wage the workers can live on.
Essentially, I am in support of it because if you look at it on the last May Day, I was the person that moved the motion on the floor of the House on this same issue of wage increase and minimum wage adjustment.
is need to take a second look at the minimum wage and by the time it is sent to
us, we will give it expeditious passage,” he said. On the December deadline given
to the Federal Government to complete all negotiations, Onyewuchi said: “Since
the Constitution makes provision for amendment to the Minimum Wage Act, we will
at the end of the day, find a common ground to agree on a minimum wage for the
country. But at the moment, the issue is still with the Tripartite Committee. I
have been briefed by the Ministry of Labour and there seems to be some levels
of disagreement. So, I do not expect it will be a one-way
thing. It is a process; the process has started.”