…Calls for total devaluation of naira
Against the backdrop of the present economic hardship in the country, Nigerian workers have been advised to wait till 2018 before pushing for the review of the Minimum Wage.
This is even as the Nigeria Employers Consultative Association (NECA) has called for the total devaluation of naira as part of the panacea to fix the economy.
The President of NECA, Mr. Larry Ettah, addressing the media on the Nigeria economy and the policy environment yesterday in Lagos said the state of the economy presently cannot support any increase in wages.
He noted that though it was quite clear that there was need to increase the Minimum wage, but he reasoned that the timing now would be quite wrong “Given the depreciation in the value of the Naira as well as inflation currently at 18.6%, a strong case can be made for raising Nigeria’s minimum wage. Not an issue of whether, but when”, he said.
Commending the Federal Government of Nigeria ‘s Economic Recovery and Growth Plan (ERGP) released on Tuesday, March 7, 2017, which projected that the country would be out of recession by December 2017, Ettah said what is important now should be to push Nigeria out of recession to recovery.
The Employers body also counselled that, such a step be preceded by a comprehensive review and restructuring of the public services of the federal, states and local governments.
He lamented that most state governments find it difficult to pay the established N18,000 Minimum Wage while several private companies have closed down in the last one year.
He said, “Given that such restructuring may not be expedient in this period of recession and rising unemployment, our recommendation is that a review of the minimum wage should be deferred until the economy has resumed strong growth and public sector finances have improved.”
On the lasting solution to the nation’s foreign exchange, The NECA boss said the way to go is the floating Exchange Rate system.
Comparing Nigeria’s economy to seven other countries who shared some economic resemblance, Ghana, Saudi Arabia, Norway, Indonesia, Egypt, Russia and Angola, Ettah said evidence from these economies was clear and compelling to the effect that floating exchange rate systems enable economies respond best to declines in the value of their exports and provide a natural adjustment mechanism to preserve FX reserves .
He stated, “Nigeria’s attempt at a fixed exchange rate system and administrative controls or rationing of scarce foreign currency has clearly failed and produced FX market arbitrage and “round-tripping”; corruption, multiple exchange rates and acted as a deterrence to investment.
“We commend the recent reforms adopted by the CBN based on the recommendation of the Acting President/National Economic Council and urge the CBN to take these reforms to the logical conclusion-a floating exchange rate system.”