The removal of the fuel subsidy has had an impact on every Nigerian including employees, as subsidy removal results in increased transportation expenses for their daily commute.
Those affected primarily are those who rely on public transportation, such as buses, taxis, and motorcycles, as these modes of transport have raised their fares in response to higher fuel prices.
Consequently, many employees now have to allocate a significant portion of their salaries solely to cover transportation costs, leaving little for other essential expenses like food, and rent, To cope with the situation, some employees may need to explore additional sources of income or search for job opportunities closer to their residences to reduce transportation expenses.
Additionally, there is a risk of job loss for employees if their employers struggle to meet payroll or sustain their businesses due to increased operational costs.
The removal of fuel subsidies in Nigeria though a contentious policy, has significant consequences for the country’s economy and society.
While the government asserts that this measure will result in cost savings, reduced corruption, and increased investment in the oil sector, many Nigerians have been having doubts regarding the advantages and have been expressing their concerns about the adverse effects it will have on their lives.
It was gathered that NLC proposed a wage increase to alleviate the impact of subsidy removal on Nigerians.
Government workers constitute only 11% of the working population in Nigeria, so the private sector is hugely affected.
Workers in the private sector especially junior workers are particularly vulnerable and heavily affected by the rise in fuel costs.
Salary increase in banks
Considering the challenges faced by these groups, some players in the private sector have set a good example by providing appropriate support and compensation to alleviate its impacts.
The private sector notably the banking sector has therefore taken measures to increase the salaries of junior staff as of July 2023.
However, it should be noted that the majority of this category of employees are outsourced from a Third party.
Reports have it that security staff, cleaners and drivers from Guaranty Trust Bank will be getting a 100% increase in salary.
Cleaners will have between N70,000 to N80,000 while drivers will have between N140,000 to 150,000.
Effects in the short-term
In general, the removal of fuel subsidies in Nigeria signifies a notable change in the nation’s economic policy.
While the objective may be to tackle fiscal difficulties and promote market-based pricing, the consequences on inflation, transportation expenses, and individuals’ well-being should not be underestimated.
If other actors in the private sector continue to raise wages, this could contribute to both short-term and long-term inflationary pressures.