Salary Increase and Inflation in Nigeria: A Rethink to Monetary Compensations for Public Servants

This study looks at some issues surrounding the effects of salary increase for civil servants, as problems that negatively affect the Nigerian public and socio-economic activities. The study employs a single-group interrupted time series analysis (SITSA) to assess the impact of salary increase interventions in the public sector by analyzing the dynamics of time series following an intervention and comparing with the pre-intervention period. More specifically, we examine if an increase in personnel cost in a given period leads to an increase in inflation in subsequent periods. The findings are that civil service salary increase results in a slight increase in inflation, and that salary increase may serve its purpose for a short time but does not resolve the problem of improved living standard in the long-run. The study suggests that government should put in place schemes to ease the cost for housing/accommodation, education, transportation, health and other basic needs of civil servants to avoid the reoccurring demand for salary rise and save from the personnel cost for more capital projects and programs that will contribute more to the development of the economy.