Fuel subsidy: Nigerian bank, companies raise employees' salaries to reduce hardship

As inflation and the cost of living continue to rise, a growing number of businesses are taking proactive steps to mitigate the impact on their employees.

Recognizing the importance of retaining a motivated and productive workforce, many companies have started to increase workers' salaries, aiming to alleviate the financial burdens faced by their employees.

Findings by Legit.ng have revealed that some of the companies displayed a magnanimity of salary increases to as much as 100%.

Background to recent salary raises

It would be recalled that the prices of petrol significantly hiked after President Bola Tinubu in his inaugural speech, announced the removal of fuel subsidy.

The federal government's withdrawal of fuel subsidy forced oil marketers and filling station owners to effect an upward review of pump prices of petrol from the former N195 per litre to between N495 to N600, depending on the location.

The increase in petrol pump prices further forced the cost of food items and transportation fares to quickly jump up amid the already ever-increasing inflation rate in Nigeria.

The prevailing conditions have brought about untold hardship for many Nigerians as businesses struggle to survive amid increased operation costs.

Hakeem Akinpelu, a social commentator told Legit.ng that the last one month since the removal of fuel subsidy has been very trying for Nigerians and businesses.

He said: Today, whatever you used to budget for transportation for a month must have tripled due to increased fares, whether by commercial buses or ride-hailing platforms. Even small businesses now have to spend more in fueling their generators to continue operations.

Companies approve salary increments for staff

Nigeria has experienced economic fluctuations in recent years, with rising inflation rates and the recent high cost of transportation taking a toll on the average citizen's purchasing power.

This situation has necessitated a thoughtful response from companies, understanding that a motivated and financially secure workforce is crucial for overall productivity and employee morale.

Recently, Legit.ng reported that one of Nigeria's leading banks, Guaranty Trust Bank, reviewed upward the salaries of its junior and contract staff by 100%.

LAPO Microfinance Bank Limited also announced a 25% and 12.5% increment in the salaries for junior and senior staff respectively across the country.

Speaking on the trend of salary increments, Happiness Uzoka, a Human Resource Manager Ladilaks Consulting explained to Legit.ng what it means to increase workers salaries at a time like this.

She said: By adjusting salaries to align with economic realities, employers are striving to alleviate financial pressures and improve overall employee satisfaction. This move can lead to increased productivity, reduced turnover rates, and a positive work environment.

Notably, the gesture to workers was not only applicable to major companies, as some growing startups have also joined in.

In a conversation with Legit.ng, Chinwe Okojie, a Data Entry Officer at Cyclofos Technologies, the parent company of HotNigerianJobs, a leading jobs website, admitted getting a recent salary raise.

She said: "Staff members got salary increments between 25%- 50%, depending on their position. This might not be so much, but the gesture is commendable. By doing this, the company has demonstrated its commitment to its employees' well-being and creates a sense of loyalty, ultimately fostering a more engaged and dedicated workforce."

How salary increments impact the economy

By increasing workers' salaries, companies can contribute to stimulating economic growth at both micro and macro levels. Ifeanyi Ubah, an economists and financial analyst tells Legit.ng that when employees have more disposable income, they are likely to spend more on goods and services, thereby boosting consumer demand.

Beyond the internal benefits for employees, the decision to increase salaries also has broader implications for Nigeria's economy. When workers have more disposable income, they are likely to spend more on goods and services, stimulating consumption and driving economic growth.

By boosting workers' purchasing power, these companies contribute to a cycle of increased economic activity that can have a positive impact on the national economy.

According to Legit.ng findings, a number of other companies and businesses have followed suit with the gesture, although at varying degrees.

In its recent report titled "Fuel Subsidy Removal Short-term Pain, Long-term Gain", Deloitte, a multinational auditing firm suggested a minimum wage increase as one of the strategies the FG can implement to cushion the impact of fuel subsidy removal on Nigerians.

The report stated: The most economically feasible form of palliative the government can embark on is raising the minimum wage. An increase in wages is inflationary and may attract a further tightening of monetary policy.

Deloitte's suggestion is no doubt in line with an earlier proposal by the Nigerian Labour Congress (NLC) and the Trade Union Congress of Nigeria (TUC) to the FG for a review of minimum wage from the current N30,000 to N200,000.

As Nigeria grapples with economic realities, companies are rising to the occasion by recognizing the importance of supporting their workforce.

By taking proactive steps to address the prevailing economic challenges, companies are setting an example of responsible and compassionate corporate practices, ultimately fostering a more resilient and prosperous Nigerian workforce.