The Federal Government has bowed to mounting pressure from the Nigeria Labour Congress (NLC) over controversial deductions from the Employees’ Compensation Scheme, offering a significant concession in a dispute that threatened to trigger a nationwide strike.
The scheme, operated by the Nigeria Social Insurance Trust Fund (NSITF), is designed as a lifeline for workers who suffer job-related injuries, disabilities, or death.
Funded exclusively by employer contributions, it ensures that no employee bears financial responsibility for their coverage.
But recent revelations that 40% of these contributions were being remitted into government coffers sparked a sharp backlash from labour leaders.
The deductions, which began in late 2023, were the result of a fiscal directive requiring all government-owned enterprises to remit 50% of their internally generated revenue to the federal treasury.
According to NSITF Managing Director, Oluwaseun Faleye, this blanket policy—intended to narrow the fiscal deficit—was mistakenly applied to the Employees’ Compensation Scheme.
Faleye admitted in a letter to the NLC that contributions were indeed subjected to automatic deductions but stressed that employers’ remittances are not government revenue.
He disclosed that corrective action began in March 2024, when the Accountant-General of the Federation ordered the cessation of such withdrawals.
While part of the deducted funds has been reversed, deductions on investment income are still under review.
Officials from the Budget Office and Ministry of Finance have since assured NSITF that no further debits will be made.
Despite these assurances, the NLC insists that the episode reflects deeper structural flaws in how workers’ funds are managed.
Assistant General Secretary of the NLC, Christopher Onyeka, described the deductions as an “anomaly,” stressing that NSITF is a tripartite institution jointly owned by workers, employers, and government—not a revenue-generating agency.
“The contributions are meant to support workers in times of injury or loss, not to fill fiscal gaps,” Onyeka warned.
He emphasized that depleting these funds jeopardizes the safety net millions of Nigerian employees rely on.
The labour union is also demanding the immediate reconstitution of the National Pension Commission (PenCom) board, which has remained incomplete since June 2023.
According to the NLC, this vacuum violates the Pension Reform Act 2014 and weakens oversight of the nation’s N15 trillion pension industry.
Analysts warn that the standoff exposes a broader challenge facing the Tinubu administration: balancing fiscal consolidation with workers’ welfare.
Since 2023, the government has pursued aggressive revenue-boosting measures, from fuel subsidy removal to electricity tariff hikes.
Labour unions argue that these policies disproportionately burden workers while eroding social protections.
Pension rights expert, Ivor Takor, backed the NLC’s call for the urgent reconstitution of PenCom’s board, stressing that the law requires full representation from workers, employers, and regulators to safeguard pension assets.
However, he clarified that pension assets remain intact, as they are held by licensed Pension Fund Administrators and strictly regulated by law.
Consumer rights advocate, Moses Igbrude, urged dialogue over confrontation, warning that a strike could worsen economic hardship.
“The path forward is negotiation and structured engagement, not escalation,” he said.
The Nigeria Employers’ Consultative Association (NECA) sided with the NLC on the PenCom issue, arguing that regulatory credibility is undermined by the absence of a board.
NECA Director-General, Adewale-Smatt Oyerinde, called for urgent government action: “Not constituting the board is a violation of the Act. Since this government prides itself on due process, we expect this step to be taken without delay.”
For now, the NLC has suspended a decision on nationwide strike action pending the review of NSITF’s letter by its National Executive Council.
But the union has made clear that its patience is not unlimited.
The outcome of this dispute could set a precedent for how Nigeria balances fiscal austerity with social protection in the years ahead.
With rising inflation, stagnant wages, and ongoing debates over a new national minimum wage, the NLC’s latest victory in forcing the government’s backtrack may embolden further demands from organized labour.