Nigeria’s 2025 Wage Bill to Surge by 60% Amid Minimum Wage Hike

Nigeria’s personnel expenditure is set to leap by at least 60% in 2025, a result of implementing the recently raised national minimum wage, which stands at N70,000 for federal employees. According to figures released in the Federal Government’s 2025-2027 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper, this wage adjustment will swell the 2025 personnel budget to a projected N6.56 trillion, up from N4.1 trillion in 2024—a nearly N2.5 trillion increase.

The MTEF document, approved last week by the Federal Executive Council, aligns the government’s spending with anticipated revenue, yet acknowledges the strain this new wage structure places on public finances. The wage hike, initially approved by President Bola Tinubu in July 2024, has begun to be distributed to federal employees, although uptake across Nigeria’s 36 states has varied. While over 20 states have pledged to implement the new minimum wage, the Nigerian LabourCongress recently issued a December 1 deadline to states that have not complied.

Government figures reveal that as of August 2024, 65% of the year’s personnel cost budget—equivalent to N2.67 trillion—had already been disbursed. By 2025, personnel expenses are expected to swell further with adjustments not only to wages but also to associated employer and employee contributions to pensions and health insurance schemes.

The government also announced an increased allocation of N9.64 trillion to cover personnel and pension costs, representing a 58.7% rise from 2024. In a statement, the report clarified, “This increase is primarily due to the minimum wage hike and its cascading adjustments across pay scales.”

As a consequence, the 2025 budget deficit is projected to widen significantly, reaching N13.08 trillion, or 3.87% of the country’s GDP, compared to the previous year’s estimated shortfall of N9.18 trillion. This growing deficit, fuelled by rising wage commitments, pension liabilities, and increased debt-servicing costs, underscores the economic headwinds facing the administration as it works to balance its fiscal obligations with the narrow margins available for external borrowing.

The administration has outlined its goal to reduce the deficit in line with the Fiscal Responsibility Act’s requirements by the medium term. However, it has acknowledged that in the short term, the bulk of the deficit financing will rely on domestic borrowing, given limited opportunities for foreign financing.