How Naira depreciated over the past four years — NBS

Iben Ejikeme Business 06/06/2023

The N13.72tn increase in worker salaries over the past four years has been diminished by ongoing Naira devaluation and inflation.

This is because the total amount paid to workers in the formal sector in nominal terms was N52.33 trillion in 2022, up 35.54 percent from N38.61 trillion in 2019.

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This represents a N13.72tn increase in the period under review, although when adjusted for inflation, the National Bureau of Statistics 2020 data on employees’ compensation revealed a N3.89tn increase. In real terms (i.e., after Naira inflation has been factored in), the total salaries of workers only increased by 19.83 per cent from N19.6tn in 2019 to N23.49tn in 2022.

According to economists, nominal GDP is the market value of goods and services produced at a particular period while Real GDP is gotten after inflation has been factored into nominal GDP. They state that real GDP is the true reflection of the economic status of a country.

Inflation rose to 21.34 per cent in December 2022 from 11.37 percent in January 2019, according to the NBS. The statistics body of the country defines compensation of employees as the total remuneration of employees in the formal sector, inclusive of their wages and salaries and benefits in kind (such as pensions).

Commenting on the third and fourth quarters of 2022, the body said, “In Q3 and Q4 of 2022, the Compensation of Employees grew by 4.28 per cent and 3.28 per cent respectively in real terms year-on-year.

“These growth rates were lower than the Q3 of 2021 and Q4 of 2021 rates recorded at 14.54 per cent and 11.79 per cent respectively. On a quarter-on-quarter basis, the CoE in real terms fell by 1.14 per cent in Q3 and grew by 12.32 per cent in Q4 of 2022.

“On an annual basis, growth was 4.41 per cent in 2022, lower than the growth of 2021. In nominal terms, the compensation of employees grew by 12.31 per cent and 13.43 per cent in Q3 and Q4 of 2022 respectively.”