The World Bank’s Nigeria Development Update (NDU) has revealed that the recent increase in Nigeria’s minimum wage will impact only 4.1% of the country’s 90 million working-age population.
This figure represents the limited share of Nigerians engaged in formal wage employment, highlighting the minimal reach of the wage hike in addressing the broader issue of poverty.
This limited impact is attributed to the country’s labor structure, where most workers are employed informally, beyond the reach of wage legislation.
As a result, the wage hike offers only marginal relief in tackling the country’s widespread poverty.
As Arbiterz earlier reported, the minimum wage was increased by the president earlier in the year from N30,000 to N70,000 across all states in Nigeria to mitigate the suffering of Nigerians in times of recent inflation and high cost of living.
Although the change was initially expected to take effect on May 1, 2024, legislative and administrative delays pushed the official enactment. President Bola Tinubu signed the new wage law on July 29, 2024, marking the legal start of the new minimum wage policy.
However, despite the law taking effect, many workers have yet to receive payments reflecting the new wage.
Labor unions have voiced their frustration, noting that the government had initially assured them the increase would be applied retroactively to May.
The delay has generated significant tension between the government and organized labour, who argue that workers deserve immediate arrears payment as promised.
The NDU notes that public sector jobs—where minimum wage hikes are often applied—are scarce and offer significantly higher pay than private-sector roles. However, access to these positions is limited by structural barriers, leaving many economically vulnerable Nigerians excluded.
While public sector employees enjoy higher wages, one-third of private-sector workers earn below the official minimum wage. This underscores weak wage enforcement and the challenges faced by low-income earners in Nigeria’s predominantly informal economy.
Employment alone is not a guarantee of escaping poverty in Nigeria. Many jobs are poorly paid and lack productivity, making it difficult for workers to secure sustainable livelihoods.
With Nigeria’s population growing at 2.5% annually, job creation has not kept pace, deepening poverty risks.
The NDU emphasizes the need for policies that not only create jobs but also improve job quality to support long-term economic stability.
Without productive jobs, millions of Nigerians remain trapped in poverty despite being employed.
90 million: Estimated working-age population in Nigeria
4.1%: Proportion of working-age Nigerians impacted by the minimum wage hike
33%: Private sector employees earning below the minimum wage
To harness Nigeria’s demographic dividend, the report highlights the importance of formalizing employment and improving wage enforcement.
The informal sector dominates the labor market, leaving many workers outside the scope of wage policies. For inclusive economic growth, Nigeria must develop frameworks that encourage the formalization of jobs and protect workers’ wages.
This shift is crucial for addressing inequalities and tapping into the economic potential of Nigeria’s young population.
The NDU warns that further increases in public sector wages could put additional pressure on government finances, already strained by subsidy removals and high debt servicing obligations.
The World Bank advises focusing on boosting private-sector productivity and creating sustainable jobs to reduce reliance on public sector wage hikes.
Balanced fiscal policies are essential to ensure that wage increases do not compromise the government’s ability to meet other critical spending needs.
The report underscores the need for a more comprehensive employment strategy to address poverty and promote economic stability.
Policymakers must focus on job quality, formalization, and wage enforcement to create a fairer labor market.
With a holistic approach to employment, Nigeria can reduce poverty, foster inclusive growth, and stabilize its economy.
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