Who truly benefits from Nigeria’s new minimum wage?

Nigeria’s latest attempt to address the economic plight of its workforce through a proposed minimum wage increase has sparked widespread debate. While the federal government’s suggested increase to ₦70,000 marks a nominal improvement over the current ₦30,000, its insufficiency becomes starkly evident when placed against the backdrop of skyrocketing inflation and the deepening cost-of-living crisis. The labour union’s initial demand for ₦490,000, later revised to ₦250,000, highlights the widening chasm between the government’s offer and what workers genuinely need to sustain themselves.

“The proposed wage increase, though an improvement, is unlikely to keep pace with these inflationary pressures.”

At the heart of this issue lies the critical question: How many Nigerians will truly benefit from the new minimum wage? Data paints a grim picture. According to Analysts Data Services Resources (ADSR), out of Nigeria’s population of 229 million, only 76 million are part of the workforce. Within this segment, an overwhelming 82.9 percent—amounting to 63 million people—are employed in the informal sector without wages, typically self-employed or working in family businesses. This informal sector, which has long been a vital part of Nigeria’s economy, remains largely excluded from formal labour protections, including minimum wage provisions.

Only 4.8 percent of the workforce, or 3.6 million individuals, receive wages in the informal sector, while a mere 6.9 percent, or 5.3 million, are employed in the formal sector and earn salaries. Of these, 1.8 million work in private organisations, while 3.5 million are public sector employees, including federal, state, and local government workers. For the 1.5 million federal government workers who represent 28.3 percent of this formal wage-earning group, the minimum wage increase will directly affect their income. However, the remaining 71.7 percent of wage earners are subject to the financial capacity of the private companies or state governments they work for, casting doubt on whether the new wage will be implemented across the board.

Beyond these statistics, the issue takes on a broader economic and social dimension. Nigeria’s inflation rate, currently at 33.69 percent, continues to erode purchasing power, while food inflation, at an alarming 40.53 percent, disproportionately impacts low-income households. The proposed wage increase, though an improvement, is unlikely to keep pace with these inflationary pressures. For workers in the informal sector, who lack wage guarantees, the struggle is even more pronounced. They face precarious employment conditions with little to no access to social protections, leaving them vulnerable to economic shocks.

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For the 153 million Nigerians outside the workforce, including the unemployed and dependents, the minimum wage debate offers little immediate relief. These individuals are instead burdened by rising living costs without a corresponding increase in income. Basic necessities such as food, housing, and healthcare have become increasingly unaffordable, exacerbating poverty and inequality. The situation underscores the need for policies that extend beyond wage adjustments to address the root causes of economic hardship.

A more equitable approach would involve comprehensive economic reforms that create opportunities for all Nigerians. Broadening the tax base, for instance, could generate additional revenue to fund social programs and wage increases sustainably. Investment in critical sectors such as agriculture, manufacturing, and technology holds the promise of job creation, enhanced productivity, and reduced dependency on imports, which are major contributors to inflation. Initiatives to formalise informal businesses could also bring more workers under the umbrella of labour protections, expanding the reach of policies such as the minimum wage.

Social safety nets must be strengthened to cushion the effects of economic hardship, particularly for those outside formal employment. Subsidised healthcare, affordable housing, and access to education are vital components of a safety net that can provide relief to struggling families. These measures would not only improve the quality of life for vulnerable populations but also contribute to long-term economic stability by fostering a healthier, more educated workforce.

Additionally, the government must tackle inflation through sound monetary policies and targeted subsidies for essential goods. Inflation erodes the real value of wages, rendering any nominal increase ineffective. Stabilising prices is crucial to ensuring that wage improvements translate into tangible benefits for workers and their families.

While the proposed minimum wage increase to ₦70,000 represents a step forward, it falls short of addressing Nigeria’s broader economic challenges. Without structural reforms and a commitment to inclusive growth, the increase risks being a symbolic gesture in a sea of systemic issues.

The government must adopt a holistic approach that prioritises job creation, inflation control, and the formalisation of the informal sector, ensuring that every Nigerian has the opportunity to benefit from the country’s economic progress. By investing in education, healthcare, and infrastructure, the government can create a skilled workforce, improve productivity, and attract foreign investment.

Furthermore, addressing corruption and promoting transparency can enhance public trust and stimulate economic activity. Only through such transformative measures can Nigeria build a more resilient and equitable future for its people, where economic growth translates into improved living standards for all.