Increment in the salaries/wages of workers always leads into a near proportionate increase in inflation. Inflation has always being a major problem in the Nigerian economy since the period of the civil war. Prior to the period, the economy was growing steadily until the first military intervention. That era was characterized with deliberate fiscal and monetary policies. As at then the economy was relatively at equilibrium. As a result of increased government activities, a deficit budget became necessary to the economy. In 1973, the economy recorded an inflation rate of 6% accompanied with the devaluation of the naira which increased the prices of imported goods. The following year, the Udoji salary award further raised inflation from 13.8 percent in 1974 to 34 percent in 1975. This was as result of increase in salaries/wages of civil servants in the country.
Inflation refers to a sustained rise in the prices of goods and services. When inflation occur, the buying or purchasing power of a currency unit declines, meaning that a person needs more money to buy the same product. To solve the problem of low standard of living, government expenditure has been on the continual increase which is partially caused by trade unions agitations for salaries/wages increase. Since independence the country’s recurrent expenditure has been on the increase in an attempt to create a balance between the purchasing power of the naira and the standard of living. Increase in the salary/wages of worker has a direct effect on inflation. The argument usually brought forward by the workers unions is a decrease in the buying strength of the currency, neglecting the fact that an increase in remuneration would only further compound the problem.
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Whenever there’s an increase in salaries/wages, workers have more money to spend, market women smiles to the banks and the government gets more money through taxes. But a segment of the society is usually at the receiving end of salary induced inflation, they are neglected and no one cares about their welfare. Apart from the fact that inflation usually leads to increased unemployment due to the fact that some private investors usually have to “down size” their workforce as a result of economic hardship occasioned by inflation. The unemployed are usually the hardest hit, directly and indirectly. The struggle and incessant clamor for new minimum wage by workers unions at different times have always been done without due consideration or sensitivity to the plight of the unemployed in Nigeria. The fact that workers and unemployed still patronizes the same markets puts the unemployed in Nigeria at the receiving end of the consequences of inflation. Increase in the remuneration of workers do not put more money in the pockets of the unemployed, to this end, the government and workers unions should always show some level of compassion to the sufferings of the unemployed in our midst.
Economic policies should be made with due cognizance to how it affects all citizens, rich and poor, working and unemployed, because we will all bare the consequence of such policies. Hence, the need for civil servants and trade unions to always be sensitive to the effect of increase in their take home pay on the generality of Nigerians, especially the unemployed. They should bear in mind that about 40 million Nigerians are currently at home doing nothing and would be happy to be employed, even if it means earning half of what they currently earn as salaries/wages. The next time the Nigerians workers are tempted to agitate for a pay rise from government, they should remember the consequences on the market and how a salary induced inflation would adversely affect the unemployed.
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