A vacancy that pays too little does not save money. It borrows against turnover, productivity and your reputation, and the bill arrives later. Here is what Nigerian data and research say, and what to do instead.

Last updated: 26 October 2026

You have seen the advert. It wants a dynamic, hardworking graduate with three years of experience, available from 8 a.m. to 6 p.m. and some Saturdays, and it offers a salary that would struggle to cover transport and lunch. Somebody will take it, because Nigeria’s labour market is tough and options are few. That is exactly why employers should hesitate.

This guide makes a direct argument: if you cannot pay a fair salary, you are usually better off not hiring that role yet, and finding another way to get the work done. It is written for business owners, HR teams and recruiters, and it leans on Nigerian data on pay, living costs and workplace behaviour wherever we could find it.

A Few Notes Before We Start

“Fair” is contested, so we use three tests below: the legal floor, what the salary can actually buy and what the market pays. We found no Nigerian dataset that shows how many employers pay below a fair wage, so we do not claim a number. The legal points come from law-firm summaries and press reports, not from the statutes themselves, and they are not legal advice. A few studies cited here are small or old, and we say so. This article also does not argue that every employer who underpays is acting in bad faith. Many are working with thin margins. The point is that underpaying rarely solves the problem it appears to solve.

What Counts as a Fair Salary in Nigeria?

The legal floor

The National Minimum Wage (Amendment) Act 2024 raised the minimum wage from ₦30,000 to ₦70,000 a month and, according to Pavestones Legal, shortened the review period from five years to three. It does not cover every worker. CDD Fact Check explains that employers with fewer than 25 workers are exempt, and law firms list further exclusions, including part-time workers and those paid by commission or piece rate. A US State Department report, as carried by BusinessDay, notes that many employers had fewer than 25 employees, so most workers were not covered, and that some states declined to implement the law.

For employers who are covered, the stakes are real. One law-firm summary says non-compliance is an offence that can attract fines and a penalty tied to the CBN lending rate on wages owed, and ICIR reported that the Federal Government warned private firms paying below ₦70,000 of possible jail. Confirm your own obligations with a lawyer.

Being legally exempt is not the same as being fair. The law sets a floor, not a target.

What the salary can actually buy

The floor has been eroding. Dataphyte calculated that the ₦70,000 wage was worth only about ₦55,379 in real terms by July 2025, a loss of more than a fifth in under a year. SaharaReporters, using NBS data, reported in June 2026 that the minimum wage could buy only about 44 litres of petrol. Headline inflation was 15.43 percent in July 2026, with food inflation at 20.31 percent. In June 2024, a Dataphyte analysis put a living wage at ₦106,000 in its headline, and we have not seen a newer estimate, so treat that as a dated reference point.

What the market pays

The Nigerian Workplace Report by Intelpoint and AltSchool Africa, based on more than 2,600 responses collected between December 2023 and March 2024, found that about 63 percent of respondents earned ₦200,000 or less a month. It also found that most employees were paid salary only, with no commission, and that non-monetary benefits were limited. Those figures are a few years old and inflation has moved since, so benchmark against current offers in your sector.

On time and complete

Fair pay also means paying what you promised, when you promised it, with the statutory extras. The Pension Reform Act 2014 made contributory pension mandatory for private organisations with three or more employees, with a minimum of 10 percent from the employer and 8 percent from the employee. A payroll guide also lists a 1 percent employer contribution to the NSITF. Sources differ on some thresholds, so check current rules with PenCom and your accountant.

Why Underpaying Fails as a Business Strategy

1. You pay for it in turnover

People leave when a better offer appears, and in Nigeria that is the leading trigger. Intelpoint’s survey ranked a better offer elsewhere as the top reason people leave. Replacing someone is costly: Gallup estimates that replacing an employee can cost between half and twice their annual salary. That is a US estimate, but the logic holds anywhere: recruiting, training and lost output cost money. The same Gallup piece reports that 52 percent of voluntary leavers said their manager or organisation could have prevented the exit. We explore this in Why Good Employees Quit Good Companies.

2. Underpaid people split their attention

When one salary cannot cover the month, workers find another source of income. A study of 200 moonlighting employees in Lagos, published by researchers at the University of Johannesburg, found that moonlighting was a key coping strategy for people on low earnings, and that it had negative effects on family time, health and productivity in the main job. The authors also noted weak enforcement of laws that protect workers from low earnings. It was a convenience sample, so it does not describe all Nigerian workers, and it found that some moonlighters would continue even if wages rose. That means better pay is not a cure, but it is a precondition.

Techeconomy describes Nigeria’s side-hustle boom as a response to economic pressure, with exhaustion that can erode performance in primary jobs. A 2026 BusinessDay opinion piece goes further, arguing that productivity gains from AI tools can flow into an employee’s second income stream instead of the employer’s output. That is commentary, not measured evidence, but it describes a risk any underpaying employer should consider.

3. Good candidates will not even apply

Glassdoor’s 2026 guide lists salary below expectations among the top three reasons candidates withdraw from hiring processes. The people with the most options leave first, which leaves you with the people who have fewest. Hiding the pay makes it worse, as our guide to salary transparency laws explains.

4. It damages your reputation and your managers

Staff talk, and so do former staff. Employers known for low pay and long hours struggle to hire, and the managers who inherit underpaid teams spend their time firefighting resignations and morale problems. See What Is Employer Branding, and Why Should a Nigerian SME Care? and Managers Should Be Trained Before Managing People.

5. The legal and regulatory risk is growing

Minimum wage, pension and employee compensation rules apply to many employers, and unions have pushed for sanctions. The NLC has insisted that employers who fail to comply should face consequences. Even if your business is below the exemption threshold today, growth will bring you into scope.

“But We Are a Startup and Cannot Afford It”

That is sometimes true, and it is a reason to rethink the hire, not to underpay it. The choice is not between hiring at any price and doing nothing. Consider these alternatives.

  • Hire one fairly paid person instead of two underpaid ones. A single well-paid, well-managed hire often delivers more than two stretched people who are looking elsewhere.
  • Use freelancers or contractors for defined projects. Pay a fair rate for the deliverable, with a clear scope and end date, and do not disguise permanent work as a project.
  • Hire part-time at a fair hourly rate. Be careful here, because part-time workers fall outside the minimum wage rules, which makes a fair rate a choice you must make deliberately.
  • Phase the hire. Wait until revenue covers the salary plus a runway, then recruit.
  • Add equity as a supplement, not a substitute. Ownership can sweeten a fair package, and our guide to equity compensation for small business employers covers how it works.
  • Offer non-cash support that matches real costs. Intelpoint found that commuting and feeding are among employees’ biggest expenses, so transport help, meals or a data allowance can be valuable. They should supplement a fair salary, not replace one.
  • Automate or outsource part of the work. Sometimes the best answer is to change the job, not shrink the pay.

A Quick Affordability Check Before You Hire

  1. Calculate the full cost. Salary, employer pension and other statutory contributions, tools, data, power and training.
  2. Check the salary against reality. Compare it with current offers in your sector and with the cost of living in the city where the person will work.
  3. Plan for a runway. Make sure you can fund the role for at least several months without relying on future sales. This is our recommendation, not a researched figure.
  4. Plan the review. Prices move quickly. Dataphyte shows how fast a fixed wage loses value, so schedule a pay review at least once a year.
  5. State the pay in the advert. It saves time and builds trust.
  6. Commit to paying on time. A late salary is a pay cut with a delay.
  7. If the numbers do not work, do not hire yet. Use one of the alternatives above.

What Recruiters Can Do

Recruiters and agencies are often the first people to see an underpriced role.

  • Ask for the pay band before accepting a search. A role without a realistic band will cost everyone time.
  • Tell clients the truth. Show them what comparable roles pay and how many candidates decline at a given level.
  • Push back on unrealistic requirements. Roles that demand senior experience at entry-level pay waste everyone’s time, as we show in The Worst “Entry-Level” Job Requirements We Have Ever Seen.
  • Decline mandates that rely on underpayment. Placements that fail within months hurt your reputation, too.
  • Help clients build a pipeline for better-paid roles. See our guide to building a pipeline from NYSC and university talent.

Frequently Asked Questions

Is it legal to pay below ₦70,000 in Nigeria? Under the 2024 Act, employers with fewer than 25 workers are exempt, along with some categories of worker, according to law-firm summaries and CDD Fact Check. Legal advice for your own case is essential, and being exempt does not make a low wage fair.

What is a fair salary? There is no single number. A useful test is whether the pay meets the legal floor, covers a realistic cost of living where the person works and compares well with what the market pays for the role.

Can benefits replace a decent salary? No, but they can support one. Transport, meals and data help, especially given what employees spend on commuting and feeding, but they do not replace the wage.

How often should we review pay? At least once a year in the current environment. The 2024 Act shortened the national minimum wage review cycle to three years, but prices move faster than that.

What if we genuinely cannot afford to hire? Then use freelancers, part-time help, automation or a phased plan, and be honest with candidates about what each arrangement offers.

Does paying more guarantee loyalty? No. Pay is only one factor, and the Lagos moonlighting study suggests some workers would hold second jobs regardless. But underpaying makes every other retention effort harder.

The Bottom Line

A salary that cannot cover a worker’s costs is not an efficient price for labour. It is a loan taken out against turnover, divided attention and a weaker reputation, and employers repay it with interest. If your budget cannot support a fair salary, choose a different arrangement or wait until it can. When you are ready to hire, you can post a job on MyJobAlly with the pay and conditions stated clearly.

This article draws on Mondaq contributors (Olisa Agbakoba Legal and Pavestones Legal), CDD Fact Check, BusinessDay, ICIR, The Guardian Nigeria, Dataphyte, SaharaReporters, Techeconomy, Intelpoint and AltSchool Africa, Gallup, Glassdoor and the University of Johannesburg, current as of October 2026. Several sources are law-firm summaries, press reports, a convenience-sample academic study and opinion pieces, and may use different methods. We found no Nigerian dataset on how many employers pay below a fair wage. The Intelpoint data was collected in 2023 and 2024, the Dataphyte living wage estimate dates from 2024 and the Gallup cost estimate is based on US data. Legal details, including pension and minimum wage thresholds and penalties, should be confirmed with a lawyer, PenCom or the relevant authority. This article is general information, not legal, financial or HR advice.