To What Extent were the Public Sector Workers underpaid in Nigeria before the Wage increase in 1998?

Abstract

This study investigates the extent to which public sector workers in Nigeria were underpaid before the wage increase September 1998. Before the wage increase, public sector workers’ take-home pay had suffered a stagnation, which dates back to 1993 fiscal year. The core of the empirical analysis it the determination of differential in pay for public and private sector workers of the same educational qualification and age. Mincerian human capital model is estimated for only urban male employees (as they constitute a homogeneous group) in the public and private sectors. The results obtained show that before wage review of’ 1998, public sector workers suffered a pay disadvantage of 6.78 percent. This paltry pay disadvantage/differential suggests (in the face of the stagnation that characterised public sector pay on the one hand and in the absence of any wage reduction in the private sector on the other) that wage growth in the private sector must have been slow and this may be attributed to a certain extent to the down-turn in the nation’s economic activity and the fact that the state of’ public sector pay in Nigeria determines the direction of private sector pay or any other pay for that matter in the various segments of the nation’s labour market.