GOVERNMENT WAGE POLICY AND THE DYNAMICS OF PUBLIC-strongPRIVATEstrong.pdf

GOVERNMENT WAGE POLICY AND THE DYNAMICS OF PUBLIC-PRIVATE SECTOR WAGE DIFFERENTIAL IN NIGERIA Alarudeen Aminu (Ph.D) (Email: alarudeen@) Department of Economics University of Ibadan, Ibadan. Nigeria January 2008 2 GOVERNMENT WAGE POLICY AND THE DYNAMICS OF PUBLIC-PRIVATE SECTOR WAGE DIFFERENTIAL IN NIGERIA Abstract The study investigates the impact of Nigeria’s government wage review policy of 1998 on the differential in pay for public and private sector workers of the same educational qualifications and ages. Empirical analysis based on Mincerian human capital model is carried out for only urban male employees (as they constitute a homogeneous group) in the public and private sectors. The results obtained show that before the wage review of 1998, public sector workers suffered a pay disadvantage of 6.78 percent while about one year after, public sector workers enjoyed a premium of 35.07 percent. In the absence of any wage reduction in the private sector, this result suggests that the implementation of the 1998 wage review succeeded in making public sector workers to be better remunerated than their private sector counterparts and it can be concluded that the wage increase in the public sector achieved its disguised goal of redressing the age-long poor pay in the sector. 1. Introduction The history of government wage review in Nigeria is