The Nigeria Labour Congress called off its threat to hold a nationwide strike from Tuesday in the wake of the accord, spokesman Benson Upah said by phone from Abuja, the capital. A report on the agreement will be presented to President Muhammadu Buhari on Tuesday afternoon.
The accord comes before Buhari seeks a second term in presidential elections scheduled for February.
Raising the minimum wage to 30,000 naira ($83) a month adds to inflation pressures at a time when the government is being urged to stop capping the cost of gasoline and curb spending on subsidies. Price-growth, which has been above the authorities target of 6 percent to 9 percent for more than three years, has led the central bank to keep the benchmark interest rate at a record high of 14 percent since July 2016.
Buhari has already set aside 160 billion naira to provide for wage increases next year. That will weigh on the state’s ability to sustain its pledge of increasing investment in roads, ports and power that’s needed to spur growth, according to analysts including Cheta Nwanze, head of research at Lagos-based risk advisory SBM Intelligence.
“An increase in the minimum wage may provide a temporary lift to spending, but as we saw in 2011, it rarely brings about a sustained improvement in the economy,” said Razia Khan, head of macroeconomic research at Standard Chartered Bank Plc. “If anything, the risk is that it will serve as an additional drag on public finances.”