“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” – Sun Tzu – The Art of War.
THE OPENING salvo in the 2026-2027 negotiation of the national monthly minimum wage was unleashed by the Nigeria Governors’ Forum (NGF). The forum proposed an upward review of the national minimum wage to ₦100,000 per month without talking to workers. This proposal was formally presented to President Bola Tinubu by the NGF Chairman during a meeting in Lagos.
The Nigeria Labor Congress (NLC) rejected the ₦100,000 proposal. The labour leaders argued that minimum wage determination negotiation is a strict tripartite, constitutional process involving government, labor, and the private sector. They pointed out that severe inflation, currency depreciation, high unemployment and soaring living costs have reduced the purchasing power of workers and forced 63% of the Nigerian population into multi-dimensional poverty.
Nigerian workers need a formula that automatically captures the impact of inflation, naira devaluation and the cost of living on the nominal monthly minimum wages. From the workers point of view, a national minimum wage must have the purchasing power to cover the prevailing cost of food, housing, clothing, transport, communication, education, healthcare, and other means of subsistence.
For instance, in 1981, the national monthly minimum wage was ₦125/month. The exchange rate was $1 = ₦0.61. Hence the minimum wage of ₦125 was equivalent to $204.92. The dollar had an average inflation rate of 2.94% per year between 1981 and 2026. Therefore, $204.92 in 1981 is now worth approximately $754.87 or ₦1,006,996 at the current exchange rate of $1 = ₦1334.
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In 1981, the monthly minimum wage of ₦125 could buy 817 litres of petrol at a PMS price of ₦0.153 per liter. Today, the minimum wage of ₦70,000 can only buy 50 litres of petrol at a PMS price of ₦1,400 per liter. Nigerian workers would require a monthly minimum wage of ₦1,143,791 to be able to buy the same number of litres of petrol as in 1981.
On October 9, 2026, the Nigeria Labour Congress (NLC) gave the Federal Government a two-week ultimatum to reduce petrol prices and start renegotiation on the national monthly minimum wage. The NLC demanded that “government is expected to take measures to reduce the price of petrol across the nation and commence the process of renegotiating a new national minimum wage, failure of which the NLC will be compelled to take remedial steps as would be directed by the relevant organs”.
The NLC President, Comrade Joe Ajero, stated: “Given the realities of our environment, there are two key directions we may consider. One is linking wages to inflation, allowing for automatic adjustments based on rising prices. If inflation increases, wages should adjust accordingly to preserve purchasing power. The alternative, an approach we previously advocated, is to anchor wages to the cost-of-living index. This means examining real conditions on the ground: transportation costs, food prices, rent, and other basic needs.” Given the vagaries of the Nigerian neo-colonial mono-export economy and the inability of the Nigerian ruling class to honor any labour agreement, linking wages to inflation and allowing for automatic adjustments based on rising prices is the better option.
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Many nations like Brazil, Costa Rica, and France have minimum wage formulas. In Brazil, the formula for adjusting the minimum wage is a function of the change in the Consumer Price Index (CPI) and the GDP. The law establishing this formula was adopted in 2008 and is renewed every 4 years. In Costa Rica, the minimum wage formula is a function of the change in the CPI and the GDP per capital. The formula was established by law in 2012. A minimum wage tripartite commission of stakeholders negotiates the components. In France, the annual change in minimum wages is determine by the formula consisting of the change in the CPI and the blue collar hourly wage. The minimum wage is adjusted every time the price index increases by 2% or more. In Nigeria, it is imperative that the national minimum wage is determined by a formula that captures the annual changes in GDP, the cost of living, rate of inflation and the exchange rate.
Nigerian workers need a formula that automatically captures the impact of inflation, naira devaluation and the cost of living on the nominal monthly minimum wages. From the workers point of view, a national minimum wage must have the purchasing power to cover the prevailing cost of food, housing, clothing, transport, communication, education, healthcare, and other means of subsistence.
From the point of view of the employer of labor (public and private) and the State (Federal and State governments), the national minimum wage is influenced by factors such as the GDP growth rate, the average profit rate, and increased revenue. Major factors affecting the minimum wages include the existing United Nation Poverty level, the average annual exchange rate, the average annual food inflation rate and the average GDP growth rate. We shall examine these factors in detail.
Nigerian workers produce the wealth of the nation. Therefore, the labour leaders must mobilize the Nigerian working class nation wide and fight for a formula for the determination of the national minimum wage. Such a formula must capture the impact of Naira devaluation/exchange rates, inflation, escalating cost of living, GDP growth rate and increasing poverty levels on the standard of living of the worker’s household. The objectives of the NLC/TUC leaders in the upcoming minimum wage struggles and negotiation should include the establishment of an independent national wage commission to recommend a formula for the determination of the annual national minimum wage to the National Assembly that will be enacted into law.
In June 2025, the World Bank (which sets the International Poverty Line used by the United Nations) revised the international extreme poverty line upward from $2.15 (2017 purchasing power parities) to $3.00 per person per day (using 2021 purchasing power parities). The $3.00 per person per day reflected the median national poverty line of low-income countries. The lower-middle-income poverty line increased from $3.65 to $4.20 per day while the upper-middle-income poverty line rose from $6.85 to $8.30 per day.
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The U.S. Dollar ($) to Naira (₦) exchange rate was $1 = ₦0.61 in 1981. It increased to $1 = ₦0.89 in 1985. The introduction of the IMF sponsored policies of SFEM/Structural Adjustment Program (SAP) increased the exchange rate to $1 = ₦7.39 in 1990, $1 = ₦21.89 in 1995, and $1 = ₦85.98 in 2000. The exchange rate rose from $1 = ₦130 in 2005 to $1 = ₦154 in 2010. Multiple windows and oil shocks increased the exchange rate to $1 = ₦199 in 2015 to $1 = ₦360 in 2020. By May 2023, the exchange rate was $1 = ₦423. The introduction of the IMF sponsored policies of Forex Unification and Floating Regime in June 2023 increased the exchange rate to $1 = ₦1,600 over the next 2 years. In October 2026, the exchange rate is $1 = ₦1,334.
In December 2024, the National Bureau of Statistics (NBS) rebased the Consumer Price Index (CPI). The price reference period (base year) was updated from 2009 to 2024, utilizing weight reference data from the Nigerian Living Standards Survey (NLSS). The basket of goods and services used to track inflation was also increased from 740 to 960 items. The weighting of rapidly growing sectors were increased and more indices (Farm Produce Index, Energy Index, Services Index, Goods Index, and Imported Food Index) were added to the CPI computations. The inflation rate statistical dropped from 34.80% in December 2024 to 24.48% in January 2025 following the rebasing of the CPI. Food inflation dropped from 39.84% to 26.08% during the same period. There was no decrease in the general price levels in Nigerian markets. In September 2026, the national food inflation rate was 19.59%.
The GDP growth rates followed the boom-and-bust cycle of oil prices from 1981 to 2025. The GDP growth rate was -13.13% in 1981 and -10.92% in 1983 following an oil glut and a recession. It was very volatile in the late 1980’s and 1990’s due to SAP policies. The commodity boom after 2000 brought relatively high GDP growth rates with 15.33% in 2000 and 6.76% in 2008. The rebasing increased GDP growth rates to 8.05% in 2010. However, the oil price shock and recession after 2015 reduced the GDP growth rates to -1.62% in 2016. The COVID-19 pandemic recession led to a -1.79% growth rate in 2020. Recovery from 2021 to 2026 has increased the GDP growth rate to 4.1% in 2026.
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We can derive a monthly national minimum wage formula for a workers’ family of 6 (two parents and four kids) in Nigeria. The formula would be MW = UNPL x EXR x NPH X (1+FIR) x (1+GGR) x NWD where MW is the Monthly Minimum Wage (₦) in year t, UNPL is the UN poverty line ($/person/day in year t-1), NPH is the average number of persons per worker’s household, EXR is the average annual Exchange Rate in year t-1, FIR is the average food annual Inflation rate in year t-1, GGR is the average GDP growth rate in year t-1 and NWD is the average number of working days per month. The minimum wage can be adjusted with this formula in January of every year.
In 2026, the UN extreme poverty line (UNPL) is $3.00/person/day after the update (2021 PPP). The average annual exchange rate (EXR) is N1365/$ and the average number of persons per worker’s household is 6. The average food annual Inflation rate (FIR) is 16.15 % after the rebasing. The average GDP growth rate is 4.2%, and the average number of working days per month is 22.
Using the formula, the monthly minimum wage for 2027 should be (3.00 x 1,365 x 6 x 1.1615 × 1.042 x 22) = N654,206. This is the barest minimum required for the survival by a worker’s family of 6 in Nigeria in 2027 based on the UN extreme poverty line.
Nigerian workers produce the wealth of the nation. Therefore, the labour leaders must mobilize the Nigerian working class nation wide and fight for a formula for the determination of the national minimum wage. Such a formula must capture the impact of Naira devaluation/exchange rates, inflation, escalating cost of living, GDP growth rate and increasing poverty levels on the standard of living of the worker’s household. The objectives of the NLC/TUC leaders in the upcoming minimum wage struggles and negotiation should include the establishment of an independent national wage commission to recommend a formula for the determination of the annual national minimum wage to the National Assembly that will be enacted into law.
Dr Agbon was HOD, Department of Petroleum Engineering, University of Ibadan (UI), former ASUU Chairman, UI. He is a consultant and lives in the USA. He can be reached via: izielenagbon@yahoo.com, or Twitter: @izielenagbon.
