The Nigeria’s civil service under the Federal Government has revealed that its spending on personnel costs is expected to rise by at least 60% in 2025.
This surge is largely due to the implementation of the newly approved national minimum wage and consequential adjustments across all cadres of the federal civil service.
For many Nigerians, especially public sector workers, this announcement is a step towards improved wages, but it also has wider economic implications. A detailed look at the numbers shows that the Federal Government had already budgeted N4.1 trillion for personnel expenditure in 2024. With a 60% increase, this amount is set to balloon to N6.56 trillion, an additional N2.46 trillion.
The increase comes in the wake of President Bola Tinubu’s approval in July 2024, which saw the national minimum wage raised from N30,000 to N70,000 per month. This new wage structure has already begun to take effect for federal workers, while many state governments are still in the process of implementing the wage increase. Despite this, over 20 states have confirmed that they will meet the N70,000 minimum wage requirement, with a few even offering amounts higher than the federal benchmark.
While federal workers are beginning to benefit from the wage increase, the situation is different in many states, where the Nigerian Labour Congress (NLC) has given non-compliant state governments a December 1, 2024 deadline to implement the new minimum wage.
Impact on the Budget
According to the 2025-2027 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper, the government projects that personnel costs will be a significant driver of the 2025 budget deficit, which is expected to rise to N13.08 trillion, up from N9.18 trillion in 2024. This represents about 38% of the total Federal Government revenues and 3.87% of Nigeria’s Gross Domestic Product (GDP). The deficit is largely attributed to the new minimum wage and pension obligations, as well as increased debt servicing costs.
The 2025 budget has allocated N9.64 trillion for personnel and pension costs, marking an increase of N3.56 trillion from the previous year. This allocation includes N1.02 trillion for government-owned enterprises (GOEs) and reflects the impact of the new wage structure.
While these increased expenditures are seen as necessary to uplift public sector workers, they also put additional pressure on the government’s finances, already strained by the need for large-scale infrastructural investments and other economic challenges.
A Balancing Act: Economic Growth vs. Expenditure
The government has emphasized that the projected deficit is a result of the minimum wage adjustments, pension obligations, and rising debt costs. While the aim is to lower deficit levels over time, the administration will largely rely on domestic borrowing to finance the deficit, as there is limited room for external borrowing.
For Nigerian workers, especially those in the federal civil service, the wage increase is a welcome development, but it comes at a time when the country’s financial challenges are growing. The government’s efforts to reduce the deficit and stimulate economic growth will need to balance the need for wage increases with fiscal responsibility.
