By Micah Jonah
January 26, 2026
Nigerian workers suffered a major loss in real income in 2024 as rising inflation erased an estimated N2.8 trillion from the actual value of wages and salaries, despite increases in nominal pay.
Data from the Central Bank of Nigeria show that the real value of compensation of employees dropped to about N25.48 trillion in 2024 from N28.27 trillion in 2023, representing a decline of nearly ten percent after adjusting for inflation.
In contrast, compensation measured at current prices rose sharply to about N75.59 trillion from N63.83 trillion, indicating that while workers earned more naira on paper, their purchasing power weakened significantly.
Economists explain that the gap between nominal income and real income reflects the impact of persistently high inflation on household welfare, as rising prices outpaced salary adjustments across most sectors of the economy.
Nigeria’s inflation rate opened 2024 at about 29.9 percent and climbed to roughly 34.8 percent by December, making basic goods and services increasingly unaffordable for average wage earners.
Analysts note that compensation of employees covers salaries, wages, and allowances, but does not clearly distinguish between public and private sector workers, suggesting that the income squeeze cuts across both segments of the labour market.
Financial experts say the true measure of welfare is not how much workers earn in nominal terms but how much goods and services their income can actually buy.
They point to the combined effects of currency depreciation, higher transport costs, rising food prices, school fees, rent, and energy expenses as key drivers of the erosion in living standards.
Using the current minimum wage as an example, economists argue that although official wage figures have increased, the real value of such income has fallen sharply when measured against current market prices.
Observers warn that conditions are even more severe in the informal sector, where many workers lack structured wage negotiations and formal protections, forcing them to accept extremely low pay just to remain employed.
They add that without stronger productivity growth and more responsive wage policies, income gains will continue to lag behind inflation, deepening financial pressure on households.
Labour analysts also stress the importance of collective bargaining and employer responsibility, noting that companies that raise prices to cover higher costs should also review staff compensation to prevent further declines in worker welfare.
Economic policy experts maintain that improving headline economic indicators will have limited meaning if they do not translate into better living conditions for ordinary citizens.
They argue that stabilising prices, strengthening the currency, supporting productive sectors, and ensuring fair wage adjustments are critical to reversing the decline in real earnings and restoring confidence in economic recovery efforts.
