ederal Government Announces New Minimum Wage Starting April 1, 2024, Allocates N24tn for Salaries in 2024-2026 Budget

The Federal Government has declared that a new minimum wage will be implemented from April 1, 2024, following the expiration of the current N30,000 minimum wage at the end of March 2024. The Minister of Information and National Orientation, Idris Mohammed, confirmed this during an interview in Abuja. The government had agreed to pay N35,000 to its workers after the removal of the fuel subsidy on May 29, 2023, but the organized labor insisted that it was a temporary measure, and the minimum wage should be reviewed in 2024.

According to the analysis of the 2024-2026 Fiscal Framework budgets, the Federal Government is set to spend N24.66tn on salaries, overheads, and pensions in the next three years. This represents 29.18% of the total budgets for the same period. As negotiations for a new minimum wage commence between the government and labor unions, it is anticipated that the personnel costs will increase by 8.51% from N7.36tn in 2023 to N7.99tn in 2024.

The analysis further indicates that the government’s focus on salaries and personnel costs leaves a considerable gap for capital expenditure, with N23.37tn (27.65% of the total budget) allocated for the same period. Critics argue that the bloated civil service and overlapping functions in various agencies contribute to the high personnel costs, leading to calls for agency mergers and scrapping.

The House of Representatives has condemned the perceived over-bloated personnel cost in the 2024 budget and urged the Independent Corrupt Practices and Other Related Offences Commission to investigate the alleged excesses. The World Bank had previously noted that personnel costs and debt servicing exceeded total revenues in 2022, limiting the fiscal space for capital expenditure.

The Federal Government is projecting a budget deficit of N9.18tn in 2024, representing 50% of total revenues and 3.88% of the estimated GDP. The high fiscal deficit is attributed to the proposed salary review for federal workers, increased pension obligations, and higher debt service costs. Despite concerns about the deficit surpassing the stipulated 3% threshold, the government maintains that it is justified by threats to national security.

In the ongoing budget debate, the House of Representatives members raised concerns about the over-bloated personnel cost and called for a thorough review. The Senate President, Godswill Akpabio, announced that the appropriation bill would be passed for a second reading, emphasizing the need to carefully consider the budget for effective implementation and positive impacts on the lives of Nigerians.