CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The effects of minimum wage increases on employment and earnings have been a subject of extensive research and debate globally, and Nigeria is no exception. As a developing nation with a diverse economy, understanding the implications of minimum wage adjustments in Nigeria is crucial for policymakers, businesses, and the workforce. This introduction aims to provide a brief overview of the ongoing discourse surrounding minimum wage increases in Nigeria and their impact on employment and earnings. Oluwatobi, S., & Adeyemi, O. S. (2017).
Historically, Nigeria has periodically adjusted its minimum wage to address issues of income inequality and the rising cost of living. Proponents argue that increasing the minimum wage can lift workers out of poverty, enhance their purchasing power, and stimulate economic growth. However, critics express concerns about the potential negative consequences, particularly on employment levels. The fear is that higher labor costs may lead businesses, especially small and medium enterprises, to cut jobs to maintain profitability. Therefore, striking a balance between improving the living standards of workers and preserving job opportunities is a complex challenge for policymakers in Nigeria. World Bank. (2020).
Research on the effects of minimum wage increases in Nigeria has yielded mixed findings. Some studies suggest that higher minimum wages positively influence earnings and reduce poverty, while others emphasize the potential drawbacks, such as reduced employment opportunities. This introduction will delve into the key arguments, methodologies, and empirical evidence surrounding the minimum wage debate in Nigeria, drawing on a range of scholarly works and research studies. By examining multiple perspectives, we aim to provide a comprehensive understanding of the nuanced relationship between minimum wage policies, employment dynamics, and earnings in the Nigerian context. Ogunyomi, P. H., & Idowu, A. D. (2019).Top of FormBottom of Form
1.2 Statement of the Problem
The effects of minimum wage increases on employment and earnings in Nigeria present a multifaceted and contentious issue that demands careful examination. The primary problem lies in the delicate balance between the intention of improving the living standards of workers through wage hikes and the potential repercussions on the employment landscape. Nigeria, as a developing nation, has grappled with persistent challenges related to income inequality and poverty. While proponents argue that increasing the minimum wage is a necessary step to address these issues, critics express concerns that higher labor costs may lead to job losses, particularly among small and medium-sized enterprises (SMEs) that may struggle to absorb increased wage expenses. This dilemma necessitates a thorough investigation into the nuanced dynamics at play, considering the unique economic and social context of Nigeria. Oluwatobi, S., & Adeyemi, O. S. (2017).
Furthermore, the problem is exacerbated by the scarcity of comprehensive and up-to-date empirical evidence specific to the Nigerian context. Existing research presents a mixed picture, and the lack of consensus on the actual impact of minimum wage adjustments hinders effective policymaking. The absence of a clear understanding of how minimum wage increases affect employment and earnings in various sectors of the Nigerian economy poses a significant challenge for policymakers seeking to implement measures that strike an optimal balance between supporting workers and sustaining businesses. Thus, the statement of the problem underscores the need for a rigorous and context-specific analysis to inform evidence-based policy decisions regarding minimum wage adjustments in Nigeria. World Bank. (2020).Top of Form
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1.3 Objectives of the Study
The main objective of the study is to examine the effects of minimum wage increases on employment and earnings in Nigeria. Specific objectives of the study are:
- 1. To quantify the impact of minimum wage increases on employment levels in different sectors of the Nigerian economy.
- 2. To analyze the influence of minimum wage increases on earnings inequality in Nigeria.
- To evaluate the economic efficiency implications of minimum wage policy in Nigeria.
1.4 Research Questions
To guide the study and achieve the objectives of the study, the following research questions were formulated:
- 1. To what extent do increases in the minimum wage in Nigeria lead to reductions in employment, particularly among low-skilled workers in informal sectors?
- 2. How do minimum wage increases in Nigeria affect the earnings gap between low-wage earners and high-wage earners?
- What are the overall economic efficiency implications of minimum wage policy in Nigeria, considering potential impacts on business costs, productivity, and economic growth?
1.5 Research Hypothesis
The following research hypothesis was developed and tested for the study:
Ho: There is no statistical significant impact of minimum wage increases on employment and earnings in Nigeria.
1.6 Significance of the Study
The study is important for many reasons. The following are the major stakeholders this paper through its practical and theoretical implications and findings will be of great significance:
Firstly, the paper will benefit major stakeholders and policy makers in the Federal Ministry of Works, Abuja sector. The various analysis, findings and discussions outlined in this paper will serve as a guide in enabling major positive changes in the industry and sub-sectors.
Secondly, the paper is also beneficial to the organizations used for the research. Since first hand data was gotten and analysed from the organization, they stand a chance to benefit directly from the findings of the study in respect to their various organizations. These findings will fast track growth and enable productivity in the organisations used as a case study.
Finally, the paper will serve as a guide to other researchers willing to research further into the subject matter. Through the conclusions, limitations and gaps identified in the subject matter, other student and independent researchers can have a well laid foundation to conduct further studies.
1.7 Scope of the Study
The study is delimited to Federal Ministry of Works, Abuja. Findings and recommendations from the study reflects the views and opinions of respondents sampled in the area. It may not reflect the entire picture in the population.
1.8 Limitations of the Study
The major limitations of the research study are time, financial constraints and delays from respondents. The researcher had difficulties combining lectures with field work. Financial constraints in form of getting adequate funds and sponsors to print questionnaires, hold Focus group discussions and logistics was recorded. Finally, respondents were a bit reluctant in filling questionnaires and submitting them on time. This delayed the project work a bit.
1.9 Organization of the Study
The study is made up of five (5) Chapters. Chapter one of the study gives a general introduction to the subject matter, background to the problem as well as a detailed problem statement of the research. This chapter also sets the objectives of the paper in motion detailing out the significance and scope of the paper.
Chapter Two of the paper entails the review of related literature with regards to corporate governance and integrated reporting. This chapter outlines the conceptual reviews, theoretical reviews and empirical reviews of the study.
Chapter Three centers on the methodologies applied in the study. A more detailed explanation of the research design, population of the study, sample size and technique, data collection method and analysis is discussed in this chapter.
Chapter Four highlights data analysis and interpretation giving the readers a thorough room for the discussion of the practical and theoretical implications of data analyzed in the study.
Chapter Five outlines the findings, conclusions and recommendations of the study. Based on objectives set out, the researcher concludes the paper by answering all research questions set out in the study.
REFERENCES
Oluwatobi, S., & Adeyemi, O. S. (2017). Minimum Wage and Employment in Nigeria: A Cluster Analysis. Journal of Economic and Social Studies, 7(1), 99-123.
World Bank. (2020). Nigeria Economic Update: Fighting Poverty and Creating Opportunities. Retrieved from https://www.worldbank.org/en/country/nigeria/publication/nigeria-economic-update-fighting-poverty-and-creating-opportunities
Ogunyomi, P. H., & Idowu, A. D. (2019). Assessing the Impact of Minimum Wage on Poverty in Nigeria. International Journal of Economics, Commerce, and Management, 7(12), 103-118.
International Labour Organization (ILO). (2021). Global Wage Report 2020-2021: Wages and minimum wages in the time of COVID-19.https://www.ilo.org/global/research/global-reports/weso/2020/WCMS_762791/lang--en/index.htm
