The Federal Government has pledged to reverse deductions from the Employees’ Compensation Scheme managed by the Nigeria Social Insurance Trust Fund, to ease tensions with the Nigeria Labour Congress, following the threat of a nationwide strike by the union.

Last week, the NLC accused the Federal Government of diverting 40 per cent of NSITF contributions to the government’s treasury. The NLC said the move undermined workers’ social protection and demanded both an immediate refund and the full reconstitution of the National Pension Commission board. It warned that non-compliance could trigger industrial action nationwide.

The Employees’ Compensation Scheme is a social insurance programme providing financial support to employees who suffer work-related injuries, illnesses, disabilities, or death. The scheme is funded entirely by employer contributions, typically around one per cent of monthly payroll, with no contributions required from employees.

In a letter to the NLC dated August 16, 2025, NSITF Managing Director Oluwaseun Faleye confirmed that deductions from workers’ compensation contributions had occurred but said they were not a diversion of funds. The letter, seen by The PUNCH, was also sent to the Ministers of Labour and Finance, the Director-General of the Budget Office, and the Accountant-General of the Federation.

Faleye said the deductions followed a federal policy introduced in December 2023 requiring all government-owned enterprises to remit half of their internally generated revenue to the treasury. The policy, issued by the Minister of Finance and Coordinating Minister of the Economy Wale Edun, was designed to boost government revenue and narrow a widening fiscal deficit, reflecting a fiscal strategy strongly championed by President Bola Tinubu.

“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,” Faleye detailed in the letter.

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 said deductions on investment income generated from these contributions continue, and NSITF is actively engaging authorities to resolve the matter. Officials from the Budget Office and the Ministry of Finance have pledged that no further debits will be made.

“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,” the NSITF assured.

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.

NLC’s reaction

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 The 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.