An Appraisal of the Effect of Minimum Wage Package on Consumption Pattern of Civil Servants.” (A Case Study of Enugu State)

Abstract

The year 2000 minimum wage package has one of its objectives to improve the living condition of Nigerian Civil Servants and to bring back to life Nigerian economy which was battered by protracted Military rule in the country. Contrary to expectations, prices of commodities in the market continued to increase, and the rate of inflationary trend continued unabated. While some Small Scale industries continued to go out of business, workers are thrown out of their jobs in the name of retrenchment and the civil servants continued to agitate for more wage increase. In view of the above problems, the researcher go to appraise the purchasing pattern of the civil servants as their earning in form of Minimum Wage Package increases to see the extent the wage increase has improved their living conditions. To find the relationship between the wage increase and the consumption pattern of the civil servants, their savings, inflation and unemployment. Some basic assumptions and hypotheses are drawn for testing based on the above identified problems. Chi square is used in testing the hypotheses to find if there is correlation between the minimum wage package and consumption pattern of the civil servants: the wage increase and their saving pattern, the wage increase and the increasing prices of commodities; the wage increase and unemployment and mass retrenchment of workers. It is discovered from the study that the minium wage package has improved the life of civil servants in Nigeria. Workers can now save part of their earning since the introduction of this new wage package. Savings among Civil Servants increased by eight percent on the average since statistics showed that they were at zero savings before the wage increase. But prices of commodities keep going higher which though not directly attributed to the wage increase. It is also discovered that the rate of increase in price index using 1985 as the base year is greater than the rate of increase in the wage package at both Federal and State levels. The category of commodities that are worst hit by the increasing price index is household goods followed by Education, recreation and entertainment. However, the result of hypothesis III showed that increasing prices of commodities (Inflation) is not attributable directly to increase in workers pay. Therefore, increasing government expenditures in elephant projects and inflated contract should be responsible. It is also discovered that the increasing prices of commodities give rise to increase cost of production. This has led to high wage bill and retrenchment of workers. As a result, increasing unemployment level in the country. The result of these findings is relevant to the Federal Government Agencies that are involved in economic planning, in formulating policies on workers salaries and other economic planning. It is useful to industrialist in channeling their resources in the consumers’ preferred needs. To the Bankers, it is relevant to understand the savings pattern of civil servants with a view of planning their investment strategies effectively. To the labour union it is relevant for proper understanding of the effect of wage increase.