Nigerian workers endured a profound erosion of their living standards in 2025, as rising incomes failed to translate into real economic relief. Despite nominal salary adjustments across sectors, new data from the Central Bank of Nigeria (CBN) reveal that the real value of employees’ earnings declined sharply. Total real wages fell by 9.85 percent to ₦25.48 trillion, underscoring a widening gap between income figures on paper and actual purchasing power in the marketplace. For millions of workers, this decline meant that higher pay did little to cushion the harsh realities of daily expenses.
Although official inflation figures suggested a downward trend toward the end of the year, economists caution that this improvement was largely statistical rather than structural. Analysts point to rebasing and methodological adjustments in inflation measurement, rather than meaningful price stability, as the reason for the reported slowdown. Professor Segun Ajibola, former President of the Chartered Institute of Bankers of Nigeria, emphasized that inflation data must be interpreted alongside currency performance, noting that wage gains lose significance when the naira continues to weaken against major currencies.
Currency depreciation emerged as a central factor behind the shrinking real value of wages. While many workers technically earned more in nominal terms, the naira’s diminished value meant that these earnings could buy far less than before. Ajibola explained that when wages are adjusted for inflation and exchange rate pressures, workers effectively experience an income decline. This phenomenon, he noted, reflects a broader macroeconomic imbalance where income growth fails to keep pace with monetary instability.
The government’s decision to raise the national minimum wage to ₦70,000 in 2024 was initially welcomed as a step toward easing economic hardship. However, the policy’s impact was quickly diluted by surging inflation, which peaked at 34.80 percent in December last year, one of the highest levels recorded in recent years. As prices rose faster than wages, the real value of the new minimum wage steadily eroded, leaving many workers no better off than before the adjustment.
Food inflation proved particularly devastating, with rates reaching 22.7 percent in July, further straining household budgets. Staple food items recorded persistent price increases, forcing families to allocate more than half of their monthly income to food alone. This shift severely reduced spending on healthcare, education, transportation, and savings, deepening vulnerability among low- and middle-income households and increasing the risk of poverty.
Economists stress that the distinction between nominal income growth and real income decline is crucial to understanding workers’ worsening conditions. As one analyst observed, “Nominally, you earn more, but in real terms, you earn less, meaning you are poorer.” The situation is particularly dire in Nigeria’s vast informal sector, where workers lack structured wage negotiations, social security, and inflation-indexed earnings, leaving them fully exposed to economic shocks.
In response to these challenges, the Nigeria Labour Congress (NLC) has called for urgent government intervention to stabilize the economy and protect workers’ welfare. Labour leaders are advocating for policies that strengthen the naira, control inflation, expand social safety nets, and ensure that wage adjustments reflect real cost-of-living pressures. Without decisive action, experts warn that declining purchasing power will continue to undermine productivity, social stability, and long-term economic growth.
Author: Moses A. Katamani
Email: infomoskambel@gmail.com
Website: www.kambelconsult.com