Analysts want insurance on the table in minimum wage negotiation 

• Will ease workers’ concerns

ONOME AMUGE & CYNTHIA EZEKWE

Insurance experts want to see insurance coverages for Nigerian workers on the table in discussions and negotiations about minimum wage in the country in a call for a new approach to addressing the issue of minimum wage concerns.

In calling for implementing insurance coverages for Nigerian workers, they argue that this would create a win-win solution that benefits both the workers and the government, and would help to resolve the long-standing issue of industrial strike actions that have led to disruptions and decreased productivity.

The experts propose that, by providing workers with insurance benefits that cover their basic needs, the government would be able to sidestep the political and economic pressure of raising the minimum wage. They argue that this would create a virtuous cycle, in which workers would be more productive and contribute to a stronger economy. In turn, this would lead to higher government revenues, which could then be used to further expand insurance benefits for workers.

As inflationary pressures and rising cost of living take a toll on Nigerian workers, the country’s two largest trade unions, the Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC), have yet again renewed their push for a revised minimum wage. The unions argue that the N30,000 minimum wage, set in 2019, is no longer sufficient to cover the basic needs of workers.

However, disagreement between the unions and the government over the amount of the revised minimum wage has created a deadlock in negotiations, with no clear resolution in sight. The two sides remain at an impasse over the amount of the revised minimum wage, with neither side willing to budge.

On March 14, 2024, a public hearing on the new minimum wage took place in all six of Nigeria’s geopolitical zones where representatives of the organised labour shared their views on the need for a new minimum wage that reflects the current economic situation and workers’ aspirations.

During the South-East zonal hearing on the new minimum wage, representatives from the NLC and the  TUC proposed an increase to N540,000 and N447,000, respectively.

In the South-South and South-West regions, representatives from organised labour presented their own proposals for the new minimum wage. In the South-South, the NLC proposed N850,000 while the TUC representative suggested N447,000. In the South-West, the NLC and TUC proposed even higher figures of N794,000 and N497,000, respectively.

At the North-Central zonal public hearing, the FCT chapter of the NLC proposed a higher figure of N709,000 for the new minimum wage. The TUC, in turn, recommended a more modest figure of N447,000.

In the North-East, labour unions proposed N560,000 per month as the minimum wage, while in the North-West, the Nigeria Labour Congress proposed a slightly lower figure of N485,000.

The debate over the minimum wage has been raging for years, with little success in finding a solution that is both acceptable to workers and feasible for the government to implement.

The problem is twofold: on the one hand, the minimum wage needs to be increased in order to keep up with the cost of living. On the other hand, the government needs to have the financial resources to pay the increased wage, without causing undue strain on the economy. Though a difficult balancing act, it is one that must be undertaken in order to ensure that workers are able to make a decent living.

To truly address the issue of the minimum wage, insurance experts say that the best solution would be to codify it into law, with a comprehensive package of insurance benefits. This would not only guarantee workers a certain level of income, but it would also provide a safety net in the event of unforeseen circumstances, such as illness, job loss, or other financial setbacks.

According to Olufemi Obathe, the deputy commissioner for insurance (finance and administration), at the National Insurance Commission (NAICOM), the insurance coverage would help to offset some of the costs of basic necessities, such as food and housing. Obathe believes that by taking this approach, the government would be able to ensure that workers are able to meet their basic needs, while avoiding the political quagmire that often ensues when the national minimum wage issue is up for debate. 

In response to the suggestion of including insurance in the national minimum wage structure, Oluwatosin Ajiniran of Coronation Life Assurance Limited emphasised the importance of educating and engaging both workers and the government on the value of insurance.

Ajiniran also suggested that the government should create policies around risk management that build trust between employers and their employees.

Ekerete Ola Gam-Ikon, a management consultant with expertise in insurance and entrepreneurship, analysed the minimum wage issue by examining the expenses of Nigerian workers. He found that some of the items in the average worker’s budget could be effectively covered by insurance, either directly or indirectly. 

Gam-Ikon suggested that  including compulsory insurance coverages in the national minimum wage discussion could serve as a powerful bargaining chip for labour unions. This, he explained, would have the dual benefit of providing workers with more financial security and reducing the financial burden on the government. Furthermore, he argued that this would act as a cushion against the economic impacts and inflationary pressures that are currently affecting the income of workers in Nigeria.

According to the insurance consultant, if all Nigerian workers were covered by the Employee Compensation Act of 2010, the Pension Reforms Act of 2014, and the National Health Insurance Authority Act of 2022, both sides would have more reason to agree on a higher minimum wage.

Insurance coverages, Gam-Ikon argued, would provide Nigerian workers with a sense of stability and security that they currently lack. He noted that with insurance in place, workers would be protected from the potential abuses of corrupt officials who might otherwise seek to deny them their benefits. This, he added, would also encourage workers to take a long-term view of their careers, knowing that their pension and health insurance are secure. In this way, insurance becomes a safety valve that protects workers and encourages them to stay in their jobs for the long haul.

Gam-Ikon identified group life assurance, health insurance, and employees compensation insurance as key components of the ‘dependent wage structure’, and he believes that they should be highlighted in the minimum wage discussion.

According to Gam-Ikon, the Pension Reforms Act of 2004 has a specific provision that states that all organisations with three or more employees must have a group life assurance policy in place. This policy, he explained, is designed to provide compensation to the family of an employee in the event of their death while in employment. The benefits of the policy are three times the employee’s annual total emoluments, which helps to ensure that the family is financially secure in the event of their loss.

He also highlighted the National Health Insurance Authority Act of 2022, which requires all Nigerians to have a health insurance plan in place. He noted that the basic plan for a family costs around N100,000 per year, which is a relatively small amount to add to the overall wage structure. He added that different plans can be adopted for different grades of employees, depending on their specific needs and financial resources.

According to Gam-Ikon, the Employees Compensation Insurance Act of 2010 requires employers to pay one per cent of their annual total wages to the National Social Insurance Trust Fund ( NSITF), a national fund established to provide compensation to workers who are injured on the job. This is to ensure that workers have the resources they need to recover from workplace injuries and return to work.

“As it is something that Nigerian Labour Congress (NLC) had midwifed, workers in Nigeria should benefit from it but so far, NSITF is keeping a lot of money received from employers and paying out relatively small amounts annually,” he observed.

As a way to address the challenges associated with the Employees Compensation Insurance Act, Gam-Ikon suggested that a portion of the funds held by the NSITF be distributed to workers on an annual basis. He emphasised that this distribution should be limited to employees below the managerial level, in order to ensure that those who need the funds the most are able to access them.

By incorporating insurance into the national minimum wage structure, Gam-Ikon believes that workers would not only gain financial security, but also a sense of optimism and hope for the future. He sees this as a way to shift the mindset of workers from focusing solely on the present to thinking about the future, which can lead to greater productivity and job satisfaction. In addition, he believes that this approach could foster a culture of responsibility and accountability among employers, who would be required to provide adequate insurance coverage for their employees.