World Bank’s lead economist for Nigeria, Alex Sienaert, has said that the recent increase in Nigeria’s minimum wage will only benefit a limited segment of the population. He specifically stated that increase impacts just 4.1% of working-age Nigerians. He said that though the increase in minimum wage is significant, the direct impact will be minimal. This is because wage hike primarily affects formal wage earners. He said there is the problem of enforcement challenge in Nigeria as about one-third of private sector employees earn less than the official minimum wage. The World Bank report cautioned that increasing wages and public sector pay could strain government finances. The multilateral financial Institution suggested that broader employment policies are needed to reduce poverty effectively.
He further said that while being employed is a way to earn a living, it however is not a guarantee that one has escaped poverty. This is because not all jobs are productive and therefore, the renumeration therefrom cannot give a life far from poverty. While Sienaert recognised that creating jobs is essential for inclusive growth, he emphasised that these jobs must harness Nigeria’s growing population and tap into its potential “demographic dividend.” Highlighted in the report was that the limited reach of policies focused on formal wage earners, such as public sector workers and minimum wage legislation. Thus, these policies often bypass the poorest workers. Taking the lead today is money news in the form of minimum wage as it affects the working-class population of Nigeria.
You would recall that we had earlier put out a report on the working-class population of Nigeria, stating that 84% of this demographic were self-employed in the first quarter of 2024. We further noted that the data was a decrease from the 87.3% recorded in Q3 2023. Well, it appears that World Bank took these and more into consideration to give their report.
