FG, Employers at Crossroads Over Workers’ Welfare as NSITF Levy Debate Deepens
The Federal Government and organised private sector employers are edging toward a critical standoff over plans to review contributions to Nigeria’s Employees’ Compensation Scheme, a move that has reignited debate over worker protection, business sustainability, and the rising cost of doing business in Africa’s largest economy.
At the centre of the disagreement is the Nigeria Social Insurance Trust Fund (NSITF), the statutory body responsible for administering compensation for workers affected by workplace injuries, occupational diseases, or fatalities.
While government officials argue that current compensation levels are grossly inadequate for affected workers and their families, employers insist that any upward review could worsen job losses, weaken investments, and push struggling businesses closer to collapse.
The disagreement came into sharp focus during the Safe Workplace Intervention Project (SWIP), an annual stakeholders’ engagement forum organised by the Ministry of Labour and Employment in collaboration with the NSITF and the Nigeria Employers’ Consultative Association (NECA) in Lagos.
Understanding the Current NSITF Framework
Under the Employees’ Compensation Act (ECA) of 2010, employers are mandated to remit a minimum of one per cent of their total monthly payroll to the Employees’ Compensation Fund.
The fund is designed to provide financial relief, medical care, rehabilitation, and death benefits to workers or their dependants in cases of workplace-related incidents.
However, more than a decade after the law came into force, government officials believe the scheme no longer reflects current economic realities, inflationary pressures, or the rising cost of healthcare and social welfare.
Minister of State for Labour and Employment, Nkeiruka Onyejeocha, argued that the present compensation framework fails to adequately support families who lose breadwinners in workplace accidents.
According to her, the situation undermines the core objective of the scheme, which is to provide dignity and security to Nigerian workers.
She stressed that workplace safety and fair compensation are not optional corporate gestures but legal obligations.
Onyejeocha also hinted that the administration is considering broader reforms to strengthen occupational safety and health standards nationwide.
Why the Proposed NSITF Levy Hike Is Stirring Controversy
The proposed NSITF levy hike has triggered strong resistance from employers, particularly in the private sector, who say businesses are already under intense financial strain.
Speaking on behalf of employers, representatives of NECA warned that any increase beyond the statutory one per cent contribution could have unintended economic consequences.
They cautioned that higher payroll-related levies could result in job cuts, reduced hiring, factory shutdowns, and the scaling back of employee benefits.
Dr Steve Ojeh, Director of Corporate Services at Seplat Energy Plc, highlighted the compounding pressures faced by businesses, including high energy costs, foreign exchange volatility, weak consumer demand, and multiple layers of taxation.
Represented by Seplat’s Senior Manager for Industrial Relations, Mr Ken Okoroh, Ojeh argued that many employers already struggle to remain solvent.
According to him, Nigerian businesses currently contend with over 75 different taxes, levies, and statutory deductions imposed by various tiers of government and regulatory agencies.
In such an environment, he said, increasing payroll obligations could discourage investment and worsen unemployment at a time when job creation is urgently needed.
Employers therefore urged the government to consider reducing, rather than increasing, the NSITF contribution rate, or at least explore alternative funding models that do not directly burden payroll costs.
Labour Unions Call for Reform, Not Abandonment
While employers push back against higher contributions, organised labour has taken a more nuanced position.
The Nigeria Labour Congress (NLC) acknowledged the importance of protecting businesses but insisted that the welfare of workers must remain paramount.
Aliyu Haruna, National Treasurer of the NLC, described the Employees’ Compensation Act as one of Nigeria’s most significant labour reforms, noting that it has provided relief to many injured workers and bereaved families over the years.
However, Haruna admitted that the scheme has not reached its full potential due to low awareness, weak enforcement, bureaucratic delays, and non-compliance by some employers.
He argued that reform efforts should focus on improving efficiency, expanding coverage, digitising claims processes, and strengthening regulatory oversight.
According to him, meaningful reform of the proposed NSITF levy hike must be accompanied by transparency, accountability, and institutional capacity building to ensure that contributions translate into real benefits for workers.
Government Seeks Middle Ground
Minister of Labour and Employment, Muhammadu Dingyadi, acknowledged the concerns raised by employers and labour unions, calling for sustained dialogue among all stakeholders.
He emphasised that workplace safety and employee welfare are essential to productivity, economic growth, and national development.
Dingyadi said the government is committed to creating a future of work anchored on dignity, protection, and sustainability, while also recognising the need to keep Nigerian businesses competitive.
He urged employers to view workplace safety investments not as regulatory burdens but as long-term safeguards that reduce accidents, improve morale, and enhance operational efficiency.
Legislative Reforms on the Horizon
Beyond the immediate debate, the controversy over the proposed NSITF levy hike is linked to ongoing legislative efforts at the National Assembly.
Lawmakers are currently considering a bill to repeal both the NSITF Act of 1993 and the Employees’ Compensation Act of 2010, replacing them with a single, harmonised law.
The proposed legislation aims to eliminate legal ambiguities, address overlaps between existing statutes, and strengthen Nigeria’s social insurance framework.
If passed, the new law could redefine contribution structures, benefit calculations, and enforcement mechanisms.
Policy analysts say the success of any reform will depend on balancing worker protection with economic realities, especially as Nigeria grapples with inflation, unemployment, and fiscal pressures.
A Delicate Balancing Act
As discussions continue, the fate of the proposed NSITF levy hike remains uncertain. What is clear, however, is that Nigeria stands at a crossroads in redefining how it protects workers without stifling enterprise.
For government, the challenge lies in ensuring that compensation schemes are humane, responsive, and aligned with global best practices.
For employers, the task is to remain competitive while upholding legal and ethical responsibilities to workers.
For labour unions, the priority is ensuring that reforms deliver real, measurable improvements in workers’ lives.
The coming months are expected to determine whether consensus can be reached—or whether the debate will deepen into a broader confrontation over labour policy, taxation, and economic survival in Nigeria.
