Rising operating costs, persistent inflation and weaker consumer spending are prompting an increasing number of businesses in Nigeria to rethink traditional salary structures.
A report by Vanguard found that some employers across sectors including retail, technology, manufacturing and services are adopting commission-based or performance-linked pay arrangements, either replacing fixed salaries entirely or making a substantial portion of workers’ earnings dependent on sales.
The shift is being driven largely by concerns over the ability of businesses to sustain fixed wage bills as customer demand weakens.
David Amaechi, managing director of a consumer electronics retail chain, said his company had experienced a significant decline in customer traffic. He explained that the business introduced a performance-based structure to retain workers while reducing the pressure of fixed payroll costs.
Under the arrangement described by Amaechi, employees receive a smaller basic salary, with a larger portion of their income tied to the volume of products they sell.
However, workers affected by such arrangements have expressed concerns about the financial uncertainty created by fluctuating earnings.
One sales representative cited in the report said her employer reduced her basic salary and introduced a commission component, leaving her earning substantially less when customer patronage fell.
The development has raised concerns among labour observers about the growing financial pressure on employees, particularly as workers contend with rising costs of housing, transportation, utilities and food.
Labour economist Dr Abiodun Shonubi described the development as an “informalization of formal employment”, arguing that the growing reliance on performance-based remuneration reflects deeper difficulties within the economy.
Commission-based remuneration is traditionally common in industries such as insurance and real estate. Its increasing adoption in other areas of the economy, however, reflects the extent to which businesses are attempting to link labour costs more directly to revenue.
While employers see the arrangement as a way of keeping businesses operational during difficult economic conditions, workers face the possibility of unpredictable monthly incomes when sales and consumer demand remain weak.
The trend highlights the broader impact of Nigeria’s economic pressures on both employers seeking to control costs and employees trying to maintain stable household incomes.
