Minimum wage: Why technical committee was set up – FG

Minimum wage: Why technical committee was set up – FG

Sunday, January 13, 2019 5:12 pm

Udoma Udo Udoma


The Minister of Budget and National Planning, Senator Udoma Udo Udoma, at the weekend explained that the Technical Committee on the Implementation of a new Minimum Wage inaugurated last Wednesday by President Muhammadu Buhari is to, amongst other things, identify additional sources of revenue to ensure that government can meet the increased costs that will arise from the implementation of a new minimum wage without affecting government’s ability to meet the other obligations of government, particularly with respect to the ambitious infrastructure development plans of the Government.

Senator Udoma who was interacting with media editors in Lagos explained that whenever a new minimum wage bill is enacted there are demands for some wage increases even from those already earning more than the new minimum wage. He added that the salary increases will impose additional costs on Government.

“Therefore the committee is expected to make suggestions as to how government can raise additional revenues to ensure that Government can still meet its expenditure on other services such as education, health, infrastructure and other important functions of Government, after paying the increased salaries.

“The committee is expected to, amongst other things, look at how to get additional revenues so that as our wage bill goes up, we are able to increase our revenues to ensure that our spending on capital projects, our spending on basic infrastructure, our spending on health, our spending on education and others is not reduced. In short, the committee is to advise on ways to ensure that notwithstanding the increase in payroll costs, there continues to be adequate funding for other government activities. This is not just for the 2019 fiscal year, but going forward, thereafter.”

On the issue of the budget deficit, the Minister said government is proposing to bring it down slightly from the N1.95 trillion projected for 2018 to N1.895 trillion in 2019. This, he said, is 1.3% of Gross Domestic Product (GDP), well within the 3% limit set by the Fiscal Responsibility Act.

As regards the debt service to revenue ratio, he assured that as our revenue situation improves that ratio will come down.

As the Minister emphasized “Nigeria does not have a debt problem, as such. Our debt is within prudent limits. However, we need to optimise our revenue generating potential. This will bring down our debt service to revenue ratio. Given the size of our economy we can, and should, be doing better, in revenue generation. This explains our focus as a Government on revenues and revenue generation.”

With regard to the complaints that the budget was small, the Minister explained “Some commentators have complained that the 2019 Budget Proposal is too small. They would like us to have a larger budget. All of us in Government would also like Nigeria to have a larger budget. Indeed as our revenues grow we will be able to expand our budget size. In truth, though we have increased our budget size significantly since we took over Government in 2015, our budget size is still far too small to meet all our needs.

“However, we are limited by the size of our revenues. Our current proposal for 2019 represents the maximum size that we believe we can prudently fund from our revenue and debt sources. There is no point announcing a large budget that you cannot fund. As we are able to generate more revenues in future we will be able to continue to increase the size of our budgets.”

Also speaking on the issue of unemployment, the Minister explained that Government was working hard to improve the enabling environment for economic expansion which will lead to the creation of additional jobs. He was confident that as the various initiatives of the Economic Recovery and Growth Plan (the ERGP) continue to be implemented we will be able to create jobs at a rate that is much faster than population growth, thereby bringing down the unemployment figures.

“Most of these jobs will be created in the private sector particularly in agriculture, construction, manufacturing, trade and services. He pointed out that many of the major economic indices are showing signs of improvement. These are the reasons the Minister indicated that he is very optimistic about the future development trajectory of the country.

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