The proposed rise in the Nigeria Social Insurance Trust Fund employee pay levy seems to be setting up a clash between the Federal Government and private sector businesses.

Employers have warned that increasing the tax above the legally mandated 1% could result in job losses and the closure of some firms.

According to The Punch, the Federal Government argued for the increase on Tuesday in Lagos at the Safe Workplace Intervention Project, an annual awards ceremony and interactive enlightenment forum for stakeholders hosted by the Nigeria Employers' Consultative Association, the NSITF, and the Ministry of Labour and Employment.

Speaking at the ceremony, Nkeiruka Onyejeocha, the Minister of State for Labour and Employment, expressed concern over the benefits given to the families of workers who died while performing their duties and urged for a reform of the compensation structure.

She emphasised that employers must adhere to set norms and stated that the situation needs to improve.

“A safe workplace is not optional; it is legal. I believe that, moving forward, we should also be reviewing the legal system and see how it complies with the quantum of workers when lives are lost. I strongly advocate that the compensation should be reviewed. When people die, their families are just given peanuts. The narratives have to change, and they must comply with the standard. SWIP helps to shift the mindset of employers from treating safety as an expense to recognising it as an investment in the people. I wish to reaffirm that this administration will not compromise on occupational safety and health,” she said.

However, speaking for employers, the Director of Corporate Services at Seplat Energy Plc, Dr Steve Ojeh, warned that the proposed increase could result in potential job losses, investment constraints, an expanded payroll burden, reduced performance-based incentives, and factory closures, among other consequences.

Speaking on behalf of Mr. Ken Okoroh, Senior Manager of Industrial Relations at Seplat, Ojeh described the difficulties that employers are currently facing, such as financial strains, inefficiencies, numerous taxes, and low benefit utilisation.

Given the growing difficulties facing businesses, he encouraged the Federal Government to avoid raising the tax and instead think about reducing the current 1% employer contribution in order to preserve thousands of jobs.

He claimed that firms currently pay more than 75 separate taxes and levies, a load that is pushing many companies to the breaking point.

Muhammadu Dingyadi, the Minister of Labour and Employment, responded by urging increased collaboration between organised labour, the Nigeria Employers' Consultative Association, and the NSITF in order to improve workplace safety for the benefit of employees, productivity, and the country.

Dingyadi advised companies and organisations to embrace better standards and best practices while reiterating the government's commitment to workplace safety.

"With this, we can build the future of work that is anchored on dignity, protection, and sustainability," he continued.