Nigeria’s N500,000 wage demand exposes why pay raises keep losing value

By Oluwatobi Ojabello and Ngozi Ekugo

Every minimum wage settlement in Nigeria gives workers a bigger nominal pay packet, but inflation and a weaker naira have eroded its purchasing power.

The current N500,000 demand will not break that cycle unless those underlying pressures change first.

Nigeria’s labour movement has repeatedly returned to the bargaining table with demands that far exceed the wage then in force. The Joint National Public Service Negotiating Council, backed by the Nigeria Labour Congress, has given the Federal Government until September 30 to begin talks on a new minimum wage of N500,000 a month, alongside a demand to cap petrol at N500 a litre, against a pump price that has touched N1,430 in some regions this year.

Olowoyo Gbenga, NLC national secretary, has framed the N500,000 figure as an opening position rather than a fixed demand, describing it as the proposed floor for a new 2027 salary structure rather than a straight replacement for the current N70,000 wage. That caveat matters because the same bargaining cycle has played out before: a large opening demand, a lower settlement and, eventually, another demand as purchasing power deteriorates.

A pattern older than the current wage law

In 2016, the NLC asked for N56,000, up from the N18,000 minimum wage then in force, before the 2019 settlement at N30,000. In 2024, labour opened at N615,000 before negotiations moved through lower figures and eventually produced the N70,000 minimum wage.

Two years later, organised labour is back with a number more than seven times the wage.

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The culprit is not the wage but what happens to it

The N70,000 wage signed into law in July 2024 faced an immediate inflation test. Headline inflation reached 34.80 per cent in December that year, while food inflation was above 40 per cent. At the same time, naira depreciation reduced the purchasing power of workers earning the new nominal wage.

The N30,000 minimum wage introduced in 2019 was worth roughly $98 at the exchange rate prevailing that year. At recent exchange rates, the same nominal amount would be worth less than $25. A worker’s nominal pay can therefore rise sharply and still lose real purchasing power when prices and the exchange rate move faster than wages.

Joe Ajaero, the NLC president, has also made a similar argument, saying earlier this year that strengthening the currency was more important than simply raising wages, because even N1 million would offer little relief if the underlying economic pressures remained.

For Daniel Onen Awo, a cinematographer, the erosion is visible in everyday expenses. His salary has risen from N130,000 in 2023 to N300,000, but he says the increase has not translated into a comparable improvement in living standards.

“Even if you earn N1 million a month, you still have to pay for transport, food and other basic needs,” he said. That reframes the N500,000 demand less as a standalone solution than as a symptom of the forces eroding household incomes.

Affordability is not evenly distributed. In 2024, the Nigeria Governors’ Forum warned that even a N60,000 minimum wage could be unsustainable for several states, with some potentially needing to devote most or all of their monthly FAAC allocations to salaries.

Implementation of the N70,000 wage has also remained uneven. Lagos has targeted a N100,000 minimum wage, while Rivers has moved towards roughly N85,000. The Federal Workers Forum has separately argued that the N70,000 wage was not fully implemented for federal workers.

For private employers, the constraint is different. A seven-fold increase in the wage floor would raise labour costs sharply for businesses operating on thin margins. Companies would need stronger revenues and productivity to absorb the increase without raising prices, reducing hiring or cutting margins.

Adewale-Smatt Oyerinde, director-general of the Nigeria Employers’ Consultative Association, said businesses need to create that room by lowering production costs and improving productivity. “From the employer’s perspective, the most direct ways to create room for wage increases and improve welfare are to reduce the cost of production and increase productivity,” he said.

Oyerinde said future wage increases should also be linked to productivity benchmarks and phased to give businesses time to plan. Victor Adegbamigbe, a talent acquisition specialist at Sigma Consulting Group, similarly said employers cannot simply double salaries while operating costs are rising. “You also cannot simply double salaries without putting the company at risk. That is the central conflict businesses are facing in 2026,” he said.

The durability of any N500,000 settlement will therefore depend not only on what government and labour negotiate, but on whether businesses can generate enough output and revenue to sustain higher wages.

What would actually break the cycle

Ending the recurring wage debate is less about finding the right nominal number than removing the forces that keep devaluing whatever number is agreed: high inflation, currency instability and weak productivity growth.

Nigeria’s disinflation from the 34.80 percent peak towards the mid-teens shows that price pressures can ease. The harder test is whether that stability can last through an entire wage cycle.

A wage mechanism linked partly to inflation could also reduce the need for repeated negotiations from scratch. But without sustained price stability, currency resilience and productivity growth, N500,000 could simply become a higher starting point for the next wage dispute.

Business Day