The Federal Government has announced that its personnel costs will rise by at least 60% in 2025 due to the implementation of the new national minimum wage and corresponding salary adjustments for federal civil servants. This projection is outlined in the recently released 2025-2027 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper.
According to the document, personnel expenditure in the 2024 budget was set at N4.1 trillion. A 60% increase translates to an additional N2.46 trillion, bringing the total to N6.56 trillion for 2025. This significant rise is primarily attributed to the updated minimum wage of N70,000, approved by President Bola Tinubu in July 2024, alongside pension and health insurance contributions impacted by salary adjustments.
The Federal Executive Council approved the MTEF last week, which aims to align financial resources with national policy priorities. The government also provided a total of N9.64 trillion for personnel and pension costs in the 2025 budget, representing a 58.7% increase from 2024’s provision.
National Minimum Wage Implementation
Federal workers have begun receiving the new minimum wage, but its implementation across states has been uneven. While more than 20 states have adopted the N70,000 minimum wage, some have exceeded the federal mandate by committing to higher pay. However, others remain non-compliant, prompting the Nigerian Labour Congress (NLC) to issue an ultimatum, requiring states to implement the new wage by December 1, 2024.
Fiscal Implications
The government anticipates a significant budget deficit due to the increased personnel costs and rising debt obligations. The 2025 budget deficit is projected at N13.08 trillion, up from N9.18 trillion in 2024, representing 3.87% of the Gross Domestic Product (GDP). The report highlights that the deficit will account for about 38% of the Federal Government’s revenue.
Current Disbursements
As of August 2024, N2.67 trillion, or 65% of the N4.1 trillion allocated for personnel costs in 2024, had already been disbursed. The report underscores that the upward revision in personnel expenses for 2025 will encompass salary adjustments, pension obligations, and increased employer contributions to the National Health Insurance Scheme (NHIS).
The government has described the adjustments as necessary for aligning public service remuneration with economic realities, though they pose challenges for fiscal sustainability. As Nigeria approaches 2025, the balance between meeting wage demands and maintaining a manageable budget deficit will remain a key focus for policymakers.
