In April 2019, President Muhammadu Buhari signed the new minimum wage bill into law amid rising living costs and poverty levels, thus increasing the minimum wage in Nigeria by 62.2%, from N18,500 to N30,000. This came amid agitations from the National Labour Congress.
While this was implemented across the board in the public sector, it must be noted that the private sector operates with a different template, which may mean that minimum wage would be complied with but not necessarily adjusted across the board for all cadres.
Till date, however, amid the devastating impact of the coronavirus pandemic, Nigerian policymakers have had to make certain tough decisions whose net impact have invariably crushed disposable income of Nigerians, probably resulting in a net reduction in the real wage rate.
For context, FG’s border closure has continued to worsen food prices; VAT increment, from 5.0% to 7.5%, has hurt disposable income; the removal of petrol subsidy has led to an increase in pump price by 12.4% to N165.0 and electricity tariffs hike by c61.3% from cN31.0/kwh to cN50.0/kwh, have all taken a huge toll on the citizenry.
Despite the arguable necessity of these reforms, inflation is currently at a 33-month high with an incredibly harsh impact on purchasing power in Nigeria.
Recently the finance minister disclosed plans to reopen the land borders – a welcome move that would likely reduce inflationary pressures. Going forward, as the wider inflationary impact continues to worsen welfare, the FG is likely to further review some of the recent reforms to palliate the economic woes of Nigerians.