To address the mounting inflationary pressures in the nation, companies opted to boost their employees’ salaries by 18.35%, reaching a total of N29.45 trillion in the initial half of 2023. These figures, extracted from the National Bureau of Statistics’ ‘Nigerian Gross Domestic Product Report (Expenditure and Income Approach): Q1, Q2,’ signify a substantial increase from N24.88 trillion during the same period in 2022.
This surge in employee compensation aligns with the deteriorating economic conditions in the country, where citizens grapple with escalating prices and an elevated cost of living. According to the NBS, the Compensation of Employees witnessed a real terms year-on-year growth of 15.08% in Q1 and 19.41% in Q2 of 2023. Notably, these rates surpass the corresponding figures of 6.48% and 3.93% in Q1 and Q2 of 2022.
The NBS further detailed that on a quarter-on-quarter basis, the Compensation of Employees in real terms experienced a 3.33% decline in Q1 but rebounded with an 11.25% growth in Q2 of 2023. In nominal terms, the compensation increased by 16.03% in Q1 and 20.50% in Q2 of 2023.

Compensation of employees, as defined by the NBS, encompasses the total remuneration in cash or kind disbursed by employers to employees for their work. This also includes direct social transfers such as payments for sickness, educational grants, and pensions.
During the period under scrutiny, businesses, including SMEs, expanded their operating surplus to N67.56 trillion, marking an 11.93% surge from the N60.36 trillion recorded in the first half of 2022. The NBS explained that operating surplus represents the profit remaining for firms after covering costs, including the profit of those who are self-employed.
The economic landscape, however, faces challenges such as record-high inflation and the removal of the fuel subsidy, contributing to weakened purchasing power among Nigerians and a deepening poverty crisis. By the end of the reviewed period, inflation had spiked to 22.79%, a 4.19 percentage point increase from June 2022, reaching 27.33% by October.
In 2022, the World Bank cautioned that Nigeria’s escalating inflation had eroded the N30,000 minimum wage by 55%, pushing an estimated five million people into poverty. Chief Economist at World Bank Nigeria, Alex Sienaert, emphasized the cumulative 55% inflation between 2019 and 2022, resulting in a significant decline in households’ purchasing power.
Sienaert highlighted, “The real minimum wage in 2022 after discounting for inflation is N19,355, while in dollar value, it is $26 after discounting for both inflation and exchange rate depreciation.” The minimum wage, which stood at $82 in 2019, had plummeted to $26.
By 2023, an additional four million Nigerians found themselves below the poverty line between January and May, according to recent disclosures by the lending institution. The World Bank anticipates an additional 2.8 million Nigerians falling into poverty before the year concludes.
Reflecting the impact of high inflation, Irene Smith, a banker from Abia State, lamented, “My salary doesn’t even last up to two weeks anymore. When you get to the market, you can’t even buy anything because of the way prices keep increasing.” A report by Afrinvest (West Africa) Limited underscored that high inflation had eroded the minimum monthly wage by over 40% since 2019.
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