Can you live off minimum wage in Nigeria in 2022?

By Richard Elesho

More than two years after it became law, labor leaders in Kogi State are warming up for a showdown with the government over its refusal to implement the 2019 Minimum Wage Act and other welfare issues. The minimum wage in the State is M18,000 as against the N30,000 approved by the Federal Government. This is even as a comparative analysis on minimum wage by Picodi.com has churned out abysmal data about living conditions in Nigeria.

In an apt reminder of the common sticker cartoon message, ‘my take home cannot take me home’ the global study pointed out that the Nigerian minimum wage is not enough for a modest basket of products. Living conditions will certainly be worse in places where the wage regime is not known.

Nigeria comes last among the reference countries with a damning conclusion that its national minimum wage cannot meet the basic living condition, (i.e food) of an average adult, per month.

Picodi, an e-commerce platform released its findings on Friday, through a detailed report. The report covers 64 countries in Africa, Asia, Australia, Europe, North and South America. The analysts checked how the minimum wage rates have changed in those countries and whether such amounts can ensure a minimum standard of living.

The study found that the countries have different tax policies. For instance, in some, a person earning the minimum national wage is exempt from income tax and contributions (Hong Kong, Philippines, Nigeria), while in others the difference between gross and net income may be up to several dozen percent.

“For this reason, the list only includes net amounts, i.e. money that the employee receives in cash or on his bank account.” The report clarifies. See other findings below:

Out of the 64 countries included, in 10 countries the minimum wage rates have not changed compared to the previous year. These include Israel, the Philippines, Thailand, Vietnam Peru, and Slovenia, at the time of writing this report, the final amount has not been ultimately accepted.

The highest increase in the minimum wage was recorded in Montenegro. As a result of, among others, favorable tax changes. The country of former Yugoslavia increased to $514 net (up 103%). We also noted a major minimum wage increase in Argentina (55%), Turkey (50%), and Kazakhstan (41%).

Nigeria came in 55th place in this ranking: the minimum wage did not change in January 2022. In the USA, the minimum wage increased by 4.1% year on year (39th place), in South Africa by 4.7% (36th place), and in the UK by 5.9% (33rd place).

Basic food

For this study, we created a contractual list of basic food products and compared the prices of these products with the minimum wage. The list consists of 8 product groups: bread, milk, eggs, rice, cheese, meat, fruits, and vegetables. The list is very limited, but in the amounts indicated, these products are sufficient to meet the minimum nutrient requirements of the average adult.

Milk (10 liters) – ₦11,470

Bread (10 loafs 500 g each) – ₦4,310

Rice (1.5 kg) – ₦1,470

Eggs (20 pcs.) – ₦1,120

Cheese (1 kg) – ₦1,950

Poultry and Beef (6 kg) – ₦9,790

Fruits (6 kg) – ₦4,680

Vegetables (8 kg) – ₦6,190

The value of basic food products at the beginning of 2022 is ₦40,980. Compared to the beginning of 2021, the price of the products has increased by 15.89%.

Basic food sufficient to meet the minimum nutrient requirements is worth 136.6% of the minimum wage. A year ago, these products were worth 117.9% of last year’s minimum wage. This means that the prices have risen faster than the minimum wage.

Where can you live off the minimum wage?

Since food preferences and perceptions of a comfortable life vary from region to region, and even from person to person, we decided to compare the prices of basic food products with the minimum wages to see how much of the minimum income a person has to spend on necessary products.

The top countries in this ranking are the United Kingdom, Ireland, and Australia: the ratio of basic products to the minimum wage ranges from 6,6% to 7,3%.

The situation of minimum wage earners in Russia, Kazakhstan, or India is not easy: in these countries, the minimum cost of basic food products consumes about half of their salary.

In this ranking, Nigeria was placed last out of 64 countries with a result of 136.6%. This means that the minimum wage is not even enough for a modest basket of products. Canada placed 7th (9.8%), the USA—13th (12.2%), and South Africa—48th (36.0%).

Methodology and data sources

In this study, we compared the monthly minimum wage for full-time work in January 2022 with wages from January 2021. These rates come from official government websites, relevant ministries, or committees. We have omitted countries where the minimum wage is negotiated by individual trade unions and where there is no statutory minimum wage (such as Switzerland, Italy, Singapore, and northern European countries). For countries where the minimum wage differs by region (USA, Philippines, Thailand, Vietnam), we calculated and used the arithmetic mean of all regions. We obtained the net amounts using local salary calculators.

The set of products used in this study is a contractual list of basic food products, created for statistical purposes only. The amounts given have been calculated based on recommendations of some health ministries regarding the minimum standards of food consumption. The prices of the contractual food products come from the portal numbeo.com, where consumers around the world monitor the prices of food and other products and services.

We converted the local currencies using the average Google Finance exchange rate for the fourth quarter of 2021.