Members of the organised private sector have cautioned against expecting private sector employers to automatically match the N100,000 minimum wage being adopted by some state governments. They warned that many small and medium-sized enterprises are already struggling under rising production costs and shrinking profit margins.

The business groups said that while some large firms and thriving sectors of the economy could afford wages above N100,000, most SMEs were battling high operating costs, inflation, energy expenses and weak consumer demand.

The comments followed growing speculation over the possibility of a new national minimum wage and the decision by some state governors to raise workers’ pay to N100,000.

President of the Lagos Chamber of Commerce and Industry, Leye Kupoluyi, said the private sector should not be compelled to pay the same wage level as the government if businesses could not afford it.

“National minimum wage does not necessarily mean private sector operators must pay their workers the same level if they cannot afford such a level at the time of introduction. This point is based on too many cost burdens that businesses are coping with at this time,” Kupoluyi said.

He added that the government must address key economic challenges affecting businesses, including fuel supply for local refineries, poor road infrastructure and support for strategic industries.

The LCCI president also expressed concern over the government’s revenue position, noting that rising debt servicing obligations could worsen Nigeria’s infrastructure deficit.

Director-General of the Nigeria Employers’ Consultative Association, Adewale Oyerinde, said although the proposed increase reflected prevailing economic realities, it could not automatically become binding on private sector employers.

“We commend the state governments for proposing the increase of the minimum wage to N100,000. This seems plausible in view of the biting economic situation, made worse by the increasing cost of energy, etc.

However, it should be strongly noted that the process for arriving at a National Minimum Wage is rooted in widely acclaimed tripartite negotiations and consultation and not just political statements, without any empirical data to back up the quantum of increase,” Oyerinde said.

He added: “While the government can, at a bipartite engagement with the Unions, agree on what the wages would be, that cannot be binding on the organised private sector. For any wage increase to be nationally binding, the International Labour Organisation process of negotiating a minimum wage must come into play.”

Oyerinde further argued that reducing the cost of living would have a greater impact on workers’ welfare than what he described as an irrational increase in wages.

National Vice President of the National Association of Small-Scale Industrialists, Segun Kuti-George, said the proposed wage level might be suitable for public sector workers but was not realistic for many businesses.

“Whereas it is good for the public service, the private sector should not be constrained to follow suit. It is desirable but not feasible for the private sector. Interestingly, the governors are getting their funds from the national commonwealth. MSMEs are already groaning under the burden of increased production costs and the consequential decline in the bottom line (profit),” Kuti-George said.

President of the Association of Small Business Owners of Nigeria, Dr Femi Egbesola, also warned that many SMEs lacked the financial capacity to immediately implement a N100,000 minimum wage.

“The move by some state governments to raise the minimum wage to N100,000 is commendable and reflects the reality of the rising cost of living. However, whether the private sector can match this level depends largely on the size, capacity, and financial health of individual businesses,” Egbesola said.

He added: “Large companies may adjust their wage structures to remain competitive and retain talent, but many SMEs are already struggling with high operating costs, inflation, energy expenses and weak consumer demand. For such businesses, an immediate increase to N100,000 may be difficult to sustain.”

Egbesola urged the government to focus on reducing the cost of doing business, saying a more supportive business environment would enable employers to pay higher wages sustainably while preserving jobs.

Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said wage levels in the private sector differed significantly across industries, company sizes and locations.

Yusuf noted that sectors such as financial services, oil and gas, and information and communications technology already pay wages well above N100,000, with some organisations offering minimum salaries of N150,000 or N200,000.

However, Yusuf said conditions were markedly different in sectors such as manufacturing, agriculture, education, retail and hospitality, where many operators continued to struggle with rising operating costs. “For many small businesses, it is a struggle to even keep the business afloat. That is the reality,” Yusuf said.

He noted that many enterprises were still finding it difficult to comply with the current N70,000 minimum wage because of soaring energy costs and weak consumer spending. “Many of the small businesses will have to struggle to be able to meet this N100,000. Even the N70,000, many of them are still struggling to pay it because they can’t give what they don’t have,” Yusuf said.

He added that businesses in rural communities would face even greater challenges because of lower purchasing power and weaker revenue generation. “It will be extremely difficult to pay this minimum wage,” Yusuf said.

The business leaders maintained that improving the operating environment and reducing production costs would be more effective in raising workers’ welfare than imposing a wage level that many businesses cannot sustain. (The PUNCH)