Raising salaries will not solve Nigeria’s cost-of-living crisis if transport, housing, food and education continue to become more expensive, economist Paul Alaje has said.
Alaje, chief economist at SPM Professionals, argues that governments should use more of the resources freed by fuel subsidy removal and foreign-exchange reforms to reduce the basic costs households face rather than repeatedly increasing wages.
“No amount of money will be enough because labour is not chasing real income,” he said on Channels Television’s Lunchtime Politics.
His argument goes to the heart of Nigeria’s post-reform economy. The government removed the petrol subsidy and unified exchange rates partly to improve public finances. But households have since faced significantly higher transport, food, housing and energy costs.
Alaje questions whether enough of the additional fiscal room has gone into infrastructure and public services that could reduce those expenses.
“When we say we have saved money from subsidy and exchange unification, should it be going to wages? Should it be going to debt service?” he asked.
The real income problem
Nigeria raised the national minimum wage from ₦30,000 to ₦70,000 in 2024, but Alaje argues that focusing on the size of workers’ salaries misses a more important measure: what those salaries can buy.
He points to housing, food, clothing and transport as four basic household expenses that have risen considerably since the economic reforms began in 2023.
The result is that a worker can receive a higher salary and still become poorer in practical terms.
“Government is not paying labour real income,” he said. “The question may be, what should be real income? Where do you spend your money? What can you buy?”
That distinction is important for businesses too. Employers cannot indefinitely increase salaries to compensate for every rise in rent, transport, food and energy without affecting margins, hiring or prices.
Wages reach a minority
Alaje also argues that wage increases have limited reach because only a small proportion of Nigerians work for government.
He estimated that public-sector workers account for less than 5% of the population.
Increasing their salaries may provide immediate relief, but it does not directly help millions of traders, farmers, artisans, self-employed workers and small business owners facing the same increase in living costs.
That is why he favours spending that reduces costs across a wider section of the economy.
Transport is his immediate priority.
ALSO READ: Tinubu Rules Out Fuel Subsidy Reversal as Savings Hit ₦15.8tn
Transport is the pressure point
Alaje wants federal and state governments to invest more aggressively in mass transit, particularly in heavily populated commercial centres such as Lagos, Abuja, Rivers and Kaduna.
He said cheaper movement would benefit workers regardless of who employs them and could also lower the cost of moving food and goods.
Transport costs remain a significant pressure on Nigerian households. The average intercity bus fare reached ₦9,607 in April 2026, 21.6% higher than a year earlier, according to National Bureau of Statistics data.
Higher transport costs also flow directly into business expenses.
Manufacturers pay more to move raw materials. Retailers pay more for deliveries. Workers spend more travelling to work, while food becomes more expensive to move from farms to cities.
Alaje believes large-scale rail, bus and road transport systems could provide broader relief than another round of wage increases.
Where reform gains go
His criticism extends beyond transport.
The economist said resources available to states and local governments should also be directed towards public education, primary healthcare and other services that reduce what households must pay privately.
If public schools are weak, workers spend more on private education. If public transport is inadequate, commuting consumes more income. Weak healthcare creates another large household expense.
The same pressures are weighing on businesses. BEA previously reported how fuel, inflation and other operating costs contributed to severe pressure on Nigerian SMEs.
Alaje is not arguing that workers should not earn more. His point is that salary increases cannot substitute for functioning public infrastructure.
The policy question, therefore, is no longer only how much Nigerians earn.
It is how much of that income remains after paying for the basic services and infrastructure that government could help make cheaper.
