Global financial institution, the World Bank has declared that the recent increase in the country’s minimum wage will only benefit just 4.1 percent of working-age Nigerians.
According to the World Bank’s lead economist for Nigeria, Alex Sienaert, only a limited segment of the population will be impacted.
He shared this during the launch of the Nigeria Development Update (NDU) report in Abuja on Thursday.
Sienaert explained that while the wage hike is significant, its direct influence will be minimal, as it primarily affects formal wage earners.
He said, “The Federal Government of Nigeria increased the minimum wage, which will affect only a small share of the population. Raising the minimum wage directly affects only 4.1% of working-age Nigerians.”
The economist emphasized that addressing poverty requires more than employment expansion, stressing the need for productive jobs that provide sustainable livelihoods.
Sienaert noted that the new report by the World Bank highlights that employment alone is not a guarantee of escaping poverty.
He said, “Being employed, however, is no guarantee of being able to escape poverty. Many jobs are not productive and therefore remunerative enough to afford a life beyond poverty.”
He stated that while creating jobs is essential for inclusive growth, those jobs must harness Nigeria’s growing population and tap into its potential “demographic dividend.”
The report further highlighted the limited reach of policies focused on formal wage earners, such as public sector workers and minimum wage legislation, noting that these policies often bypass the poorest workers.
The report read: “Policy initiatives that cover only highly-formalized wage jobs – including policies focused on public sector workers and minimum wage legislation – may not reach many of Nigeria’s poorest workers directly.
“While increasing the demand for wage workers is a key policy priority, the vast majority of employed Nigerians – especially from poorer households – do not currently hold such jobs. This limits the direct effects that policies focusing on subsets of wage workers can have on poverty.
“In particular, public sector wage jobs are not only rare and disproportionately occupied by comparatively better off Nigerians; they also pay significantly more than private sector and other types of wage jobs, even after taking individual characteristics into account, suggesting there are additional barriers to entry into public sector jobs, which may lock out the poor and economically insecure.”
It also noted enforcement challenges, with about one-third of private sector employees earning less than the official minimum wage, stating, “Similarly, minimum wage legislation may not directly reach the poorest workers because they do not hold wage jobs and around a third of private sector wage earners receive less than minimum wage anyway, demonstrating that enforcement is imperfect.”
The report cautioned that increasing wages and public sector pay could strain government finances, suggesting that broader employment policies are needed to reduce poverty effectively.
