Members of the organised private sector have warned against expecting private sector employers to automatically adopt a N100,000 minimum wage, despite moves by some state governments to raise workers’ salaries to that level.

The business groups argued that while some large corporations and thriving sectors of the economy may have the capacity to pay wages above N100,000, many small and medium-sized enterprises are already struggling with rising production costs, inflationary pressures, high energy expenses and shrinking profit margins.

The position of the organised private sector comes amid increasing speculation about the possibility of a new national minimum wage and following decisions by some state governors to increase workers’ pay to N100,000.

The PUNCH reported that the president of the Lagos Chamber of Commerce and Industry, Leye Kupoluyi, said private sector employers should not be compelled to pay the same wage level as government workers if such a salary scale is beyond their financial capacity.

“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 stressed that government must tackle key economic challenges affecting businesses, including fuel supply issues for local refineries, poor road infrastructure and the need for support to strategic industries.

Kupoluyi also expressed concern about the government’s revenue profile, warning that increasing debt servicing obligations could further deepen Nigeria’s infrastructure deficit.

Director-General of the Nigeria Employers’ Consultative Association, Adewale Oyerinde, acknowledged that the proposed increase reflected the current economic realities facing workers but insisted that 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 further explained that while governments could reach agreements with labour unions on wage levels, such arrangements would not necessarily apply to private sector employers.

“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 also argued that reducing the cost of living would have a greater positive 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 could be appropriate for public sector employees but was unrealistic for many private 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 cautioned that many SMEs lack the financial strength 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 noted that larger companies may be able to adjust their wage structures in order to remain competitive and retain skilled employees, but many smaller businesses are operating under severe financial strain.

“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 government at all levels to focus on reducing the cost of doing business, maintaining that a more supportive business environment would enable employers to raise wages sustainably while protecting jobs.

Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said wage levels in the private sector vary considerably depending on industry, company size and geographical location.

According to Yusuf, sectors such as financial services, oil and gas, and information and communications technology already pay salaries significantly above N100,000, with some organisations offering minimum wages ranging between N150,000 and N200,000.

He, however, noted that the situation is different in sectors such as manufacturing, agriculture, education, retail and hospitality, where operators continue to grapple with escalating operating costs.

“For many small businesses, it is a struggle to even keep the business afloat. That is the reality,” Yusuf said.

Yusuf further stated that many enterprises are still finding it difficult to comply with the existing N70,000 national 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 operating in rural communities would face even greater challenges due to lower purchasing power and weaker revenue generation.

“It will be extremely difficult to pay this minimum wage,” Yusuf said.

The business leaders unanimously maintained that improving the operating environment, addressing infrastructure challenges and reducing production costs would be a more effective way of improving workers’ welfare than imposing a wage level that many businesses may be unable to sustain.