Tensions are rising between the Federal Government and organised employers over a proposed increase in the employee compensation levy, a move that could deepen disagreements on labour costs and business sustainability across Nigeria.
The levy, which is administered under the Employees Compensation Act, is paid by employers to provide insurance coverage for workers in cases of injury, disability or death arising from the workplace. Government officials argue that rising compensation claims, inflation and expanding workforce risks have made a review of the levy inevitable.
According to sources familiar with the proposal, the planned increase is aimed at strengthening the Employee Compensation Fund to ensure prompt payment of benefits to affected workers and their families. Authorities insist that the current contribution rate is no longer sufficient to meet growing obligations, especially in high risk sectors such as construction, manufacturing and mining.
However, employers have pushed back strongly against the plan. Business associations warn that an upward review of the levy would add to the already heavy cost burden facing companies, many of which are struggling with high energy prices, foreign exchange instability and declining consumer demand.
The Nigeria Employers Consultative Association has expressed concern that additional statutory charges could discourage job creation and force some businesses to downsize. The group argues that rather than increasing levies, government should focus on improving fund management, reducing leakages and expanding the economy to grow contributions organically.
Small and medium sized enterprises are expected to be hit hardest by the proposed increase. Many operators say they are already operating on thin margins and fear that higher compulsory contributions could push them out of business or into the informal sector.
Labour unions have taken a more cautious stance, acknowledging the need for adequate worker protection while urging government to engage employers transparently. Union leaders stress that employees should not become casualties of disagreements between regulators and business owners.
Policy analysts note that the dispute reflects a broader challenge in balancing worker welfare with economic competitiveness. They warn that failure to reach consensus could lead to prolonged disputes, legal challenges or partial compliance by employers.
The Ministry of Labour is expected to convene stakeholder consultations in the coming weeks to address concerns and explore possible compromises. Until then, uncertainty remains over whether the levy increase will proceed as planned or be delayed to avoid further strain on the private sector.
