Minimum wage: FG asks technical committee to look for additional revenue

The Technical Committee on the Implementation of a new Minimum
Wage inaugurated last Wednesday by President Muhammadu Buhari has
been asked to look for additional sources of revenue to pay the
minimum wage and the consequential salary adjustment that will
follow.

The Minister of Budget and National Planning, Senator Udoma Udo
Udoma, during an interactive session with the media on Friday,
explained that the committee would, among other things, identify
additional sources of revenue to ensure that the government could
meet the increased costs that would arise from the implementation
of a new minimum wage without affecting government’s ability to
meet the other obligations particularly with respect to the
ambitious infrastructure development plans of the current
administration.

According to Udoma, 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 said, “All these salary increases will impose additional
costs on the government. Therefore, the committee is expected to
make suggestions as to how the government can raise additional
revenues to ensure that the government can still meet its
expenditure on other services such as education, health,
infrastructure and other important functions of the government,
after paying the increased salaries.”

A statement signed on Sunday by the Special Adviser (Media) to
the Minister, Akpandem James, added, “The committee is expected to,
among 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, basic infrastructure,
health, 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.”

Because of government’s commitment to the minimum wage and
increased salaries, Udoma had said that the amount provided for
recurrent (non-debt) spending would rise from N3.53tn in 2018 to
N4.72tn in 2019.

So, there is a substantial increase in the recurrent
expenditure, which according to the minister, reflects an increase
in salaries and pensions including provisions for the
implementation of a new minimum wage.

“This is the reason why the President has set up a technical
committee to look at additional revenue sources so that we can pay
the minimum wage and the consequential salary adjustment,” he
reiterated.

On the issue of the budget deficit, Udoma said the government
was proposing to bring it down slightly from the N1.95tn projected
for 2018 to N1.895tn in 2019. This, he said, was 1.3 per cent of
Gross Domestic Product and well within the three per cent limit set
by the Fiscal Responsibility Act.

On the debt service to revenue ratio, the minister gave the
assurance that as the nation’s revenue situation improved, the
ratio would come down.

The minister said, “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 the 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 the 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 the 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 the government was working hard to improve the
enabling environment for economic expansion which would lead to the
creation of additional jobs.