Nigeria - Income
Distribution
The reliability of Nigeria's national
income statistics was limited by meager industry-wide
information (especially for domestically consumed
commodities), the questionable validity of data, and
quantification based on subjective judgments by state
officials. Despite deficiencies in aggregate economic
statistics, a few general tendencies concerning growth,
income distribution, prices, wages, and the employment
rate could be discerned. The Office of Statistics
indicated that GDP grew 6.0 percent annually (adjusted
for inflation) between FY (fiscal year) 1959 and FY
1967. GDP shrank at an inflation-adjusted annual rate of
1.1 percent between FY 1967 (which ended two months
before the secession of the Eastern Region) and FY 1970
(which ended three months after the war). However,
because capital destruction such as occurs during
wartime is not reflected in annual measures of GDP, the
decline in net domestic production was probably severely
understated.
Annual population growth estimates
very considerably, but it is generally held that growth
was roughly 2 percent in the late 1950s and early 1960s,
2.5 to 3.0 percent from the mid-1960s to the late 1970s,
and 3.0 to 3.5 percent in the 1980s. Accordingly, annual
GDP growth per person can be estimated at 4.0 percent in
the late 1950s and early 1960s, 3.0 to 3.5 percent in
the mid 1960s, -3.5 to -4.0 percent during the civil
war, roughly 7 percent in the early to late 1970s, -6.0
percent from the late 1970s to the early 1980s, and -2.5
percent for the balance of the 1980s.
Nigeria's decline in real GNP per
capita by 1988, to US$290, relegated the nation to
low-income status below India, Pakistan, and Ghana.
Other indicators of development--life expectancy, for
which Nigeria ranked 155th out of the world's 177
countries, and infant mortality, for which Nigeria
ranked 148th among 173 countries--were consistent with
Nigeria's low ranking in income per capita.
The authors of the first plan had
argued that a "very good case can be made that premature
preoccupation with equity problems will backfire and
prevent any development from taking place." Thus,
Nigeria's first plan stressed production and
profitability, not distribution. Yet people who already
own property, hold influential positions, and have good
educations are best situated to profit once growth
begins. Thus, a society with initial income inequality
that begins to expand economically is likely to remain
unequal, or even become more so.
 Although
wealth appeared to be highly concentrated in Nigeria,
the government had no comprehensive income-distribution
estimates. From 1960 to 1978, the number of rural poor
remained constant, but the rural poverty rate declined.
During the same period, the urban poor roughly doubled
in number, although the rate of urban poverty also
probably declined. Federal civil service studies
indicating a substantial increase in income
concentration from 1969 to 1976 may have reflected a
trend toward overall income inequality, exacerbated
perhaps by the large raises given to high-ranking
administrators by the Udoji Commission on wages and
salaries in 1975. But this inequality probably eased
from 1976 to the end of the decade, thanks to increased
salaries for low-income workers, the abolition of
subsidized automobile allowances for the wealthy, and a
decline in economic activity, especially in the oil
sector.
During the 1960s and 1970s, Nigeria's
degree of income concentration was average for
sub-Saharan Africa, which, after Latin America, had the
highest income inequality of any region in the world.
Income concentration in Nigeria was probably higher than
in Niger or Ivory Coast, about the same as in Tanzania,
and lower than in Kenya and Cameroon.
Because the rural masses were
politically weak, official income distribution policies
focused on interurban redistribution. More than 80
percent of Nigeria's second plan (1970-74) investment
was in urban areas. The third plan (1975-80) emphasized
more even distribution, but did not mention urbanrural
imbalances.
The ratio of industrial to
agricultural labor productivity, 2.5:1 in 1966,
increased to 2.7:1 in 1970 and 7.2:1 in 1975.
(Urban-rural per capita income ratios showed greater
differentials for succeeding years, largely because
incomes from capital, property, and entrepreneurial
activity were far larger for city dwellers than for
rural residents.) The sharp rise in industrial
productivity between 1970 and 1975 was due largely to
phenomenal increases in oil output, prices, and tax
revenues rather than to technical changes or improved
skills. Without oil, 1975's labor productivity ratio
would have been 3.0:1, as the terms of trade shifted
away from agriculture. Moreover, emigration drained the
rural areas of the most able young people, attracted by
the Udoji commission's doubling of government minimum
wages. The loss of the superior education and skills of
these rural-to-urban migrants resulted in a decline in
inflationadjusted agricultural productivity between 1970
and 1975. Average rural income was so low by 1975 that
the richest rural quartile was poor by urban standards.
Rising debt and falling average income
in the 1980s had a particularly severe effect on the
poor. Consumption per capita fell 7 percent annually
during that decade, material standards of living were
lower in the mid-1980s than in the 1950s, and calorie
and protein intake per capita were no greater in 1985
than in 1952. In effect, the economic crisis of the
1980s canceled out the progress of the previous two
decades.
Urban real wages fell rapidly between
1982 and 1989 as a result of a minimum wage freeze in
the formal sector. Rural real wages also fell, but more
slowly because few employers had previously paid as much
as the minimum wage on the farm. Beginning in 1986, the
liberalizing effect of the SAP on agricultural prices
and the exchange rate also redistributed income from
urban to rural areas, especially in the agricultural
export sector. In the 1980s, the urban self-employed, a
group which included many in the low-income informal
sector (e.g., cottage industries, crafts, petty trade,
and repair work), had lower incomes than urban wage
earners. Even the rural selfemployed (smallholder
farmers, sharecroppers, and tenants, as well as a few
commercial farmers) had lower incomes than rural wage
earners, who ranged from unskilled, landless workers to
plantation workers.
During the 1980s, the urban-rural gap
narrowed--a result of rising urban poverty rather than
of growing rural affluence. A World Bank/International
Finance Corporation study estimated that 64 percent of
urban households and 61 percent of rural households were
in poverty in FY 1984. Because 70 percent of Nigeria's
population was rural, most of the poor were to be found
in rural areas. By the late 1980s, with structural
adjustment and agricultural price decontrol, the average
income of all rural households exceeded the average for
urban households. Ironically, rural household income
levels in the late 1980s only improved relative to
levels for city households, as real income in both urban
and rural areas had fallen throughout the 1980s. The
result was that, for the first time since independence,
more Nigerians migrated to the country than to urban
areas.
Rapid inflation, 20 percent yearly
between 1973 and 1980 and more than 20 percent per year
between 1980 and 1984 (as measured by the consumer price
index), dropped to 5.5 percent in 1985, 5.4 percent in
1986 (years of good harvests), and 10.2 percent in 1987,
before rising to 38.3 percent in 1988 and 47.5 percent
in 1989. Under a World Bank SAP, 1986 and 1987 were
years of tightmoney financial policy. But a poor harvest
in 1987 put pressure on 1988 food prices, and
authorities lifted the wage freeze and eased fiscal
policies in 1988 in the face of rising political
opposition to austerity. Inflation abated somewhat in
late 1989, as food supplies grew and the Central Bank of
Nigeria tightened monetary policy.
Real wages fell significantly in the
l980s following a statutory wage freeze (1982-88),
salary cuts in the public sector in 1985, and a constant
nominal minimum wage that started in 1981. From 1986 to
1989, real wages fell almost 60 percent.
Nigeria
Nigeria - LABOR
Nigeria
The size of Nigeria's labor force was
difficult to calculate because of the absence of
accurate census data. The labor force increased from
18.3 million in 1963 to 29.4 million in 1983. Census
data apparently understated the number of self-employed
peasants and farmers, but estimated that the proportion
of Nigerians employed in agriculture, livestock,
forestry, and fishing fell from 56.8 percent in 1963 to
33.5 percent in 1983. The percentage of the labor force
employed in mining rose from 0.1 percent in 1963 to 0.4
percent in 1983. Exactly comparable data were lacking on
manufacturing, but from 1965 to 1980 industry's share of
the labor force rose from 10 percent to 12 percent
whereas the services sector grew from 18 percent to 20
percent of the labor force.
Unemployment
The national unemployment rate, estimated by the
Office of Statistics as 4.3 percent of the labor force
in 1985, increased to 5.3 percent in 1986 and 7.0
percent in 1987, before falling to 5.1 percent in 1988
as a result of measures taken under the SAP. Most of the
unemployed were city dwellers, as indicated by urban
jobless rates of 8.7 percent in 1985, 9.1 percent in
1986, 9.8 percent in 1987, and 7.3 percent in 1988.
Underemployed farm labor, often referred to as disguised
unemployed, continued to be supported by the family or
village, and therefore rural unemployment figures were
less accurate than those for urban unemployment. Among
the openly unemployed rural population, almost
two-thirds were secondary-school graduates.
The largest proportion of the unemployed
(consistently 35 to 50 percent) were secondary-school
graduates. There was also a 40- percent unemployment
rate among urban youth aged twenty to twenty-four, and a
31-percent rate among those aged fifteen to nineteen.
Two-thirds of the urban unemployed were fifteen to
twenty-four years old. Moreover, the educated unemployed
tended to be young males with few dependents. There were
relatively few secondary-school graduates and the
lowered job expectations of primary-school graduates in
the urban formal sector kept the urban unemployment rate
for these groups to 3 to 6 percent in the 1980s.
Labor Unions
Labor unions have been a
part of Nigerian industry since 1912, when government
employees formed a civil service union. In 1914 this
organization became the Nigerian Union of Civil Servants
after the merger of the protectorates of Northern
Nigeria and Southern Nigeria. In 1931 two other major
unions were founded--the Nigerian Railway Workers Union
and the Nigerian Union of Teachers (which included
private-school teachers). Legalization of unions in 1938
was followed by rapid labor organization during World
War II as a result of passage by the British government
of the Colonial Development and Welfare Act of 1940,
which encouraged the establishment of unions in the
colonies. The defense regulation of October 1942 made
strikes and lockouts illegal for the duration of the war
and denied African workers the cost-of-living allowances
that European civil servants received. In addition, the
colonial government increased wages only modestly,
although the cost of living rose 74 percent from
September 1939 to October 1943. In June and July of
1945, 43,000 workers, most of whom were performing
services indispensable to the country's economic and
administrative life, went on a strike that lasted more
than forty days. In large part as a result of the
strike's success, the labor movement grew steadily and
by 1950 there were 144 unions with more than 144,000
members.
Although the labor
movement was federated in 1941, the period from the end
of World War II to 1964 was characterized by numerous
splits, regroupings, and further fragmentation.
Factionalism was rampant, engendered by the reluctance
of the Colonial Office to strengthen union rights,
dependence on foreign financial support, the thwarting
of labor's political objectives by nationalist leaders,
and intramural ideological differences. The most visible
manifestation of labor problems was the dispute over
whether to affiliate with the East European
socialistoriented World Federation of Trade Unions,
based in Prague, or the more capitalist-oriented
International Confederation of Free Trade Unions,
headquartered in Brussels.
In 1963 union members
numbered 300,000, or 1.6 percent of the labor force.
Despite this low level of organization, labor discontent
worsened as the gap widened between the wages of
white-collar and those of blue-collar workers. In FY
1964, supervisors were paid thirty-three times as much
as daily-wage workers and semiskilled workers in public
service. After independence, many workers had begun to
feel that the political leadership was making no effort
to reduce the inequalities of the colonial wage and
benefit structure. Corruption and conspicuous
consumption were perceived to be widespread among
politicians. An April 1963 pay raise for ministers and
members of parliament further fueled labor resentment
because rank-and-file civil servants had been doing
without raises since 1960. The five superordinate
central labor organizations consequently formed the
Joint Action Committee (JAC) to pressure the government
to raise wages. Numerous delays in the publication of a
government commission report on wages and salaries
provided partial impetus for a JAC-mobilized general
strike of 800,000 supporters, most of them nonunionists,
which lasted twelve days in June 1964. Although the
strike demonstrated the government's fragility, the JAC
could not translate its victory into permanent political
strength; labor unity disintegrated in the face of
overtures by political parties to segments of organized
labor as the federal elections of December 1964 neared.
Political parties and
communal associations were banned during the military
rule of the late 1960s, so labor unions posed a
potential organized threat to the government. The
military government's decree in 1969 forbidding strikes
was repeatedly defied during the next four years, most
notably in 1973, when the regime gave in to demands by
striking postal and telecommunications workers, about
one-fifth of the federal civil service. Labor activities
and internal strife among four central labor
organizations continued up to 1975, when the military
government attempted, unsuccessfully at first, to merge
the four bodies into one unit, the Nigerian Labour
Congress (NLC). The government dissolved the four
central unions, prohibited union affiliations with
international labor organizations, and in 1977 banned
eleven labor leaders from further union activity. Under
terms of a 1978 labor decree amendment, the more than
1,000 previously existing unions were reorganized into
70 registered industrial unions under the NLC, now the
sole central labor organization.
In the early 1980s, the
civilian government found itself losing control of
organized labor. Numerous wildcat strikes occurred in
1980-81, and in May 1981, the NLC mobilized 700,000 of 1
million unionized Nigerian workers for a two-day strike,
despite the opposition of a government-supported
faction.
Working days lost through
strikes declined from 9.6 million in 1982 to 200,000 in
1985 in the midst of a decline in national income that
had begun in 1983. Industrial unrest resulted, however,
in demands by larger number of workers for payments of
salary arrears and fringe benefits as real wages fell by
almost 60 percent. The causes of the decline in real
wages were the World Bank-advised SAP and the
unfavorable terms of trade that resulted from the
collapse of the world oil market between 1986 and 1989. |
