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The Federal Government has promised to reverse deductions from the Employees’ Compensation Scheme, managed by the Nigeria Social Insurance Trust Fund (NSITF), in an effort to ease tensions with the Nigeria Labour Congress (NLC) following threats of a nationwide strike.
Last week Thursday, Naija News reports that the NLC accused the government of diverting 40 per cent of NSITF contributions to the treasury.
The union described the move as an attack on workers’ welfare and demanded an immediate refund, as well as the reconstitution of the National Pension Commission board. It warned that failure to meet these demands could trigger nationwide industrial action.
The Employees’ Compensation Scheme is a social insurance programme that provides financial support to employees who suffer work-related injuries, illnesses, disabilities, or death. The scheme is solely funded by employers, who contribute about one per cent of their monthly payroll, while employees make no contributions.
In a letter dated August 16, 2025, and addressed to the NLC, the Managing Director of NSITF, Oluwaseun Faleye, admitted that deductions had been made from workers’ compensation contributions but insisted that they were not a diversion of funds.
The letter, which was also copied to the Ministers of Labour and Finance, the Director-General of the Budget Office, and the Accountant-General of the Federation, explained that the deductions followed a federal policy introduced in December 2023.
According to Faleye, the policy, signed by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, mandated all government-owned enterprises to remit 50 per cent of their internally generated revenue to the treasury. The directive, he said, was part of the Tinubu administration’s strategy to boost revenue and close a widening fiscal deficit.
Faleye stated in the letter, “Recall that the Federal Ministry of Finance circular (Ref: FMFCME/OTHERS/IGR/CFR/21/2021) dated December 28, 2023, introduced a policy of automatic deduction of 50 per cent from the internally generated revenue of all Federal Government-owned enterprises.”
The agency said employers’ contributions, which are statutory liabilities and not government revenue, are no longer being deducted following a March 2024 directive from the Accountant-General of the Federation, and some of the previously deducted funds have already been reversed.
He stated that deductions on investment income generated from these contributions continue, and the NSITF is actively engaging with authorities to resolve the matter. Officials from the Budget Office and the Ministry of Finance have pledged that no further debits will be made.
The NSITF stated, “We have been assured that this matter will be addressed. Both the Minister of Finance and the Director-General of the Budget Office, in meetings held in August 2025, committed that no further deductions would be made from either contributions or investment proceeds.”
Tinubu appointed Tanimu Yakubu as Director-General of the Budget Office in June 2024, following the expiry of Ben Akabueze’s tenure, and in March 2025, named Shamsedeen Ogunjimi Accountant-General of the Federation to succeed the retired Oluwatoyin Madehin.
The labour union acknowledged receipt of NSITF’s letter but said its executive council will review the correspondence before deciding on the proposed strike, Assistant General Secretary Christopher Onyeka told Punch.
Onyeka described NSITF as a tripartite agency jointly owned by workers, employers, and the government and argued that it should not be treated as a revenue-generating body.
He said, “The contributions to NSITF are intended to compensate workers in the event of injury. They are not government revenue and should not be used for fiscal purposes.
“Depleting these funds would compromise the agency’s ability to support workers when required. It is anomalous for the Ministry of Finance to classify NSITF as a revenue-generating entity.”
The union noted that the deductions began under the current administration and said letters were sent to the Ministry of Finance and NSITF over a month ago. The union received a response on Saturday. “Protecting these funds is our responsibility,” Onyeka added.
Meanwhile, reacting to allegations that NSITF was seeking to amend the Employees’ Compensation Act in a way that could undermine workers’ rights, Faleye said the agency’s proposals were aimed at improving enforcement, not weakening protections.
He said, “As an organisation seeking to enhance its operational efficiency, we have engaged with the National Assembly through our annual retreats, attended by other tripartite stakeholders. At those retreats, we made suggestions and recommendations to members of the National Assembly, which we believe will further enhance compliance with the Employees’ Compensation Scheme.”
One of those recommendations, among others, is the need to give NSITF more powers to enforce compliance with the ECA on defaulting employers. This recommendation will better enhance and protect workers’ rights rather than undermine them.
The executive added that any further legislative action rests with the National Assembly. “As an organisation, it is not within our purview to make laws or stop the process of an amendment of any act by the National Assembly. That power resides solely with the legislature. On our part, we have resolved to engage the process at the appropriate time during stakeholders’ engagement exercises for such amendments, and we will advise all stakeholders to also engage appropriately so we can have an inclusive law when completed,” Faleye said.
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