Navigating Rising Cost of Living

Omolabake Fasogbon

It is not all victory for Nigerian workers by the time the federal government finally implements the new salary structure.

This is also the same for private sector workers some of who have started enjoying pay rise.

The Nigerian economy in recent years has experienced an unprecedented inflationary surge that is far above earnings growth. 

Ideally, an equilibrium should exist between the pace of inflation and workers’ earnings to maintain a decent standard of living. But this seems utopian in the country which over time several minimum wage revisions have not matched the cost of living. 

A Professor of Economics, Stephen Onyeiwu,  argued that Nigeria’s minimum wage has never protected the populace from poverty because it is not indexed to inflation. 

According to Prof. Kemi Okuwa of the Nigerian Institute of Social and Economic Research, Nigeria being 44th in Africa in terms of paying the lowest minimum wage, is among the worst salary payers in the continent. 

Economist theories suggest a proportional relationship between inflation and purchasing power. In other words, a high inflation rate translates to a weak purchasing power for individuals, and increased costs for businesses and vice versa. 

Amid a lack of inflation-proof pay, a salary increase presents no real gain. The high cost of living instead means workers are learning less in real terms. This typically defines Nigeria’s situation. 

Striking a balance between expenses and income therefore becomes crucial to avoid financial strain.  In realising this, Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, cautioned workers against lifestyle inflation due to pay rise, noting that financial discipline is more important this period than ever. 

“Don’t be tempted by a pay rise and decide to embark on a spending spree. By the time you compare the prices of goods with the value of your rise, you will realise that there is no increment in real terms.

“Preparing a budget will come in handy this period to avoid spending outside resources and focus on priority. Our focus should be more on food, transportation, house rent and children’s education,” he said.

Warning against impulsive buying, Yusuf advised workers to appreciate their limitations concerning their resources.

He added, “ Try as much as possible to avoid borrowing, and if you must borrow at all, consider approaching someone who will not embarrass you in case there is a default, avoid lenders with prohibitive interest rates but as much as possible, live within your means.”

Of importance too, according to the CPPE boss, is seeking efficient energy solutions, noting that energy expenditure remains a significant line-item expense for households and corporations alike.

 “In every way possible, embrace renewable energy. Though the initial cost may be heavy but subsequent cost of maintenance is way cheaper. If you use a vehicle, try to convert to CNG which is almost 50 percent or cheaper than running on petrol.

“Avoid unnecessary journeys or trips trying to please everyone. One needs not be told about the prohibitive cost of transportation now. It is important that we relate with the reality of our financial limitations”, he asserted. 

Similarly, a Chartered Accountant and Tax Professional, Dr. Titilayo Fowokan, emphasised the need to prioritise needs and minimise want to stay above water.

“Wastage must be eliminated and cheaper substitute for items should be considered,” she advised. 

Titi like Yusuf, in admitting to the high cost of transportation, maintained that workers could navigate this hurdle. 

“This is the time employees should look inwards and collaborate with colleagues on how to manage transport costs. They can explore options such as car-pooling, or join staff buses, where available.

“If permissible, flexible working hours can be negotiated with employers to cut down on some commuting costs. Considering the increase in energy costs- Band A electricity tariff, the conscious curtailing of energy wastage such as putting on electrical appliances on a need basis may have to be adopted”, she counseled.