SOAS Research Online

Abstract

This is a case study of pay differentials in an underdeveloped country - Nigeria. In it an attempt is made to (1) provide quantitative estimates of the size and trend of (a) Inter-Skill, (b) Clerical-Manual, (c) High/Low-level manpower, (d) Sectoral and (e) Inter and Intra-Industry differentials; (2) offer hypotheses to explain the observed size and trend of these differentials; (3) appraise the performance of the pay structure in terms of economic efficiency and equity and (4) advance some recommendations aimed at improving the efficacy of the country's pay structure as an instrument of economic development policy. The study reveals that occupational differentials (i.e. (a) to (c) above) in Nigeria, although very wide as compared with the size of such differentials in developed countries, have tended to become compressed over time. On the other hand Nigerian sectoral and industrial differentials appear, inspite of their large size, to have widened. Neither the compression of occupational nor the widening of sectoral and industrial differentials was uniformly spread over time, each being particularly marked in the years of major review of pay by the government. In the determination of these differentials market forces have played a limited or passive role. The crucial determinants have been institutional forces, especially the actions and policies of the government and trade unions. Owing to the haphazard nature of its development and the lack of planning with which wage and income issues have been approached in the country, the Nigerian pay structure was found to be defective as an instrument for allocating manpower into desired sectors and occupations, for mobilising domestic resources for economic development and for achieving equitable distribution of income. To improve the efficacy of the pay structure as an instrument of economic development policy, it is recommended that a National Incomes Commission, which, inter alia, will bring income issues into the area of systematic planning, should be established.