Employees of banks have enjoyed a pay rise ranging between 9 to 52 percent in the wake of the removal of fuel subsidy by the Federal Government, a report by KPMG Nigeria has revealed.
The report titled 2023 Survey on Employers’ Response to Fuel Subsidy Removal in Nigeria was published in September.
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In the general economy, the report observed that employers have implemented pay increases of between 19 per cent and 40 per cent in 2023, in response to the fuel subsidy removal.
During his inaugural address at Eagle Square, Abuja, President Bola Tinubu, declared “Subsidy is gone.” The president said there was no provision for subsidy in the national budget from June 2023 and, therefore, it stands removed.
His declaration immediately resulted in a hike in the prices of fuel and fuel queues across the nation. The development also took most, if not all employers by surprise.
KPMG said that due to the suddenness of the announcement, most employers were uncertain of their response, especially given business challenges within prevailing economic circumstances.
Following the subsidy removal, the pump price of petrol has increased from between N189/litre and N194/litre1 as of May 2023 to between N577/litre and N617/litre presently, depending on location within the country. This represents an increase of between 205 per cent and 218 per cent.
According to National Bureau of Statistics, the average cost of intra-city bus transportation in Nigeria has increased from N649.59 in May 2023 to N1,285.41 in June 2023, representing about 979 per cent increase, largely due to the increase in pump price of petrol.
In the months following the subsidy removal, Wema Bank PLC increased salaries of employees to cushion the impact, Guaranty Trust Bank PLC also increased salary for junior and contract staff with cleaners earning between N70,000 and N80,000, while drivers earn between N140,000 and N150,000 per month.
Zenith Bank PLC also increased salaries across the board, ranging from 25 per cent to 50 per cent, depending on staff level, with cleaners and drivers now earning between N80,000 and N120,000.
In addition, KPMG said that Fidelity Bank PLC, GTB and Zenith Bank commissioned more staff buses to ease the burden of commuting employees.
Following the subsidy removal, the Federal Government announced a N5bn palliative for each state of the nation including the Federal Capital Territory, the release of five trucks of rice to each state for onward distribution to citizens and indicated a willingness to review upward the wages of public sector workers among other measures.
Some state governments also offered palliatives to their workers in the form of salary increases, conditional cash transfers to the needy, free bus or reduced rate of transport fares and more.
The report based on 164 submissions comprised about 55 per cent FMCG; ICT, Payment Systems & E-Commerce; Consulting; Oil and Gas (Retail, Marketing & Services); and Financial Services (Banking Institutions) companies. 97 per cent of the respondents are private sector organisations, while the balance of three per cent are public sector entities.
About 18 per cent of respondents have a staff strength of at least 2,500, while about 69 per cent have strength of 500 employees and below.
According to the report, employers across different sectors who were involved in this survey had implemented palliatives in the form of salary increases, transport/car/fuel allowance or voucher reviews and work from home.
To fund the palliatives, the report said that some businesses plan staff rightsizing, increase in sales volume, price increase, reduction in other HR costs such as training, cutting operating and administrative costs and absorption of cost by the company via reduced profit margin. Others include donations/grants, budget reallocation; reassigning cost, increase in productivity, etc. while some other businesses were undecided about the funding mechanism.
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