Wages and salaries are the remunerations paid to workers for working physically or mentally for a certain period. This payment can be weekly, monthly, or yearly depending on the modus operandi of the workplace and laws of the country. Wages and salaried payment also extend to being paid in the form of compensations. Such as food allowances, paid vacation, sick leave, and health insurance. Often times you’ll find people using salary and wage interchangeably, but are they the same?
Let’s explore the differences between a wage and a salary.
Technically, wages and salary payments value are heavily dependent on varying factors like occupation, education level, industry, and demography. Salaries and wages play a significant role in the lives of people in any given country. So they are often considered a key economic indicator of what a country is doing right for the masses.
Contextually, based on calculations, components, and benefits, salaries and wages are significantly different. A salary is a fixed amount of money paid to a worker regardless of the nature of their work or hours worked. These sums are typically calculated on a yearly basis and can be divided into monthly, bi-weekly, or semi-monthly payments. And are usually based on experience and job performance. However they are always higher than wages for the same position.
During the hiring process, salary earners are given an employment contract that contains detailed information about their job tasks and expectations. This will include total annual salary and any additional kinds of remuneration that may be expected.
Wages on the other hand are payments to a worker or a contractor based on the amount of time worked. In this case, pay is usually calculated in hours, a daily or weekly basis.
This encompasses regular pay, overtime pay, holiday pay, and other additional pay structures. Wages are usually paid weekly, bi-weekly, or monthly to the workers. For example, part-time workers are usually paid in wages, using a per-hour pay rate instead of an annual salary.
Salary and Wages Structure in Nigeria
Several attempts have been carried out by different administrations to review salaries/ wages in the history of Nigeria since independence.
From the Morgan Commission in 1963 to the Committee on Harmonization of remuneration in public service in 1998. However, none of this has been able to solve the problems of low and incompatible salaries/wages for the average Nigerian workers. In the year 2024, the current National minimum wage in Nigeria is 30,000 NGN which is about $23 per month, an unrealistic amount and one of the lowest minimum wages in the world ranking among countries like Bangladesh and Pakistan. Looking at the inflation rate and level of expenses in the country, this is an unacceptable pay that must be revised to meet the current realities of the citizens.
According to Nigerian Paylab, the salary range of employees working in Nigeria by default is about 87,934NGN to 337,934 NGN. With the Managing Director(Top management) claiming the best position earning about 827,622 NGN. And a Nursery school teacher assistant claiming the lowest spot to earn 83,807 NGN. However, this stat didn’t include salary earners in rural areas earning far less than in urbanized cities. An average nursery school teacher in Ondo state for example earns about 15,000-25,000 monthly. While Public servants earn about 46,000 NGN —70,000 depending on their qualifications and status..
Premium Times reported in this article that about 24.7 million Nigerians earn less than 100,000 NGN yearly according to research by Socio-Economic Rights and Accountability (SERAP). An appalling figure estimated at around $100 which is no less than a weekly wage in countries like the UK and the US. Also, it was reported that about 10.7 percent earn around 201,000 NGN to 300,000 NGN yearly and 12.7 percent earn above 300,000 NGN.
Challenges of salary and wages in Nigeria
Different factors contribute to the poor remuneration system in Nigeria, the topic of wages and salary challenges in Nigeria has long been a complex and controversial discourse since they represent both an integral aspect of the employer’s labor cost and employees’ main source of income.
A study investigation revealed that wages and incomes in Nigeria are not designed to meet workers’ basic demands. Poor pay and salaries are frequently cited as one explanation for a lack of motivation to work and corruption in the Nigerian workplace.
Here are a few points highlighting the challenges affecting the wages and salaries system in Nigeria.
- Poor and Weak Institutional Settings: Despite the availability of several bodies like the Nigerian Labor Congress and the House of Assembly who can advocate on behalf of the masses to improve salaries to match the economic realities in the country. Many of these discourses are either stalled or sabotaged for political reasons thereby yielding no positive results.
- Greed and exploitation of workers by Political leaders and employers: From 2013 to the present day, a shameful trend persistent among government institutions is owing workers their hard-earned money. Horrible cases where FG, State Government, and private-owned institutions can go 8 months without paying salaries have been well documented in the media. To make it worse, they would refuse to pay the amount owed in arrears to their workers and nothing would be done or. This is exploitation at its finest and a stumbling block to a standard remuneration system in Nigeria.
- The Nigerian government’s failure to promptly address and resolve economic realities: A prime example would be the recent policy of fuel subsidy removal implemented across the country. In such a case, before policies like this are implemented, there should be a proper review of wages and salaries of workers across the country to determine if they’d be able to adjust to such massive change. And this is one of the many policies the Nigerian government makes without putting into consideration the average income of Nigerians and their purchasing power to navigate the sudden economic change.
Solutions to the Challenges Facing Salary and Wages in Nigeria
Wage and salary payments are the most fundamental responsibility of any employer, whether government-owned or private sector. As a crucial component of collective bargaining, standard wages and salaries payments can have both economic and social ramifications. It is relevant in terms of worker motivation and investments, as well as productivity, consumption, and navigating inflation issues.
Listed below are a few solutions to salary/wages woes in Nigeria.
- Protection of workers’ rights: New laws must be implemented and enforced to ensure that workers’ basic rights such as salaries, and wages compensations are respected and paid as when due. There should be a severe penalty to any organization that defaults or aims to undermine any of these rights.
- Overall review of wages and salary systems Nationwide: Industries and workers should work together to influence the Nigerian government to review and implement new, uniform rates and standard minimum wages across the country. This will ensure that workers and public servants are fairly compensated based on their talents and competence. For example, the House of Assembly and executive members and government officials get excessive pay while workers in other governmental and private firms have to manage crumbs. The new rates and wage adjustments should be implemented in such a way that creates a socially equitable outcome for all citizens in Nigeria.
- Mandatory inclusion of compensations and Health benefits to attract more workers in Nigeria: Companies and organizations should be mandated to include modern and basic fringe benefits to boost workers’ motivation. Basic benefits like vacation pay, health insurance, sick leave, child care, and other menial compensation should be highly encouraged among all employers in Nigeria regardless of the profession or skill.
Conclusion
Standard salaries and wages are essential for every government or community that wishes to serve and sustain its citizens. The Nigerian administration should take the brave step of reviewing salaries/ wages and closing the loopholes of employers exploiting workers through poor compensations and late or non-payment of salaries and wages.
