Nigeria’s firms have seen their salary bills rise by 17.3 percent in one year as they scramble to retain staff amid soaring inflation, BusinessDay’s findings have revealed.
Data sourced from the latest Nigerian Gross Domestic Product Report (Expenditure and Income Approach) report by the National Bureau of Statistics (NBS) showed the compensation of employees increased to N13.21 trillion in the first six months from N11.26 trillion in the same period of 2022.
“The Nigerian consumer is currently facing significant challenges because of a combination of high inflation, sluggish economic growth and high unemployment rates,” analysts at SBM Intelligence, an Africa-focused geopolitical research and strategic communications consulting firm said.
They added that the situation has resulted in wage increases that are not keeping pace with rising inflation. “This has left Nigerians with little choice but to gorge on credit facilities.”
A recent report by SBM showed that five in 10 Nigerians experienced an increase in their income in the last four years. The 50 percent of Nigerians who had an increased income is more than double the 18.6 percent who reported an income decline.
More than a quarter (27.4 percent) of the respondents said their income has remained unchanged since 2019.
The Federal Government reforms, such as the removal of petrol subsidy and naira devaluation, implemented in the second quarter of the year, caused a surge in the cost of living of cash-strapped consumers.
According to the NBS, the country’s inflation rate, a measure of the general price level, rose to an 18-year high of 27.33 percent in October from 26.72 percent in the previous month.
The World Bank said in June that inflation pushed an estimated four million more Nigerians into poverty in the first five months of this year.
The removal of subsidy on petrol tripled the pump price to N617 from N184, causing public transportation providers such as buses, tricycles and motorcycles to raise transportation fares. This situation affected those who rely on public transportation, particularly workers in the private sector.
With higher transportation fares, many employees are forced to allocate a substantial portion of their salaries to cover commuting expenses, leaving little for other essential needs like food and rent.
Last week, the Federal Government said a new minimum wage regime would come into effect on April 1, 2024. Idris Mohammed, minister of information and national orientation, said the current N30,000 minimum wage would expire at the end of March 2024.
“Certainly, there is a new wage regime that will come in on April 1, 2024. That is why these palliatives were targeted so they would cushion economic hardship before then. In our negotiation with labour, we said that the wage issue was not something one could just fix. A committee that will also involve labour itself will work on it,” he said.
Tinubu in October approved a N35,000 provisional wage award for all treasury-paid federal workers for six months, following further consultations with the Federal Government delegation that met with the leadership of the Nigeria Labour Congress and Trade Union Congress.
Then the next month, the government said it had commenced payment of the N35,000 wage award to the workers.
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