Workers mark May Day in pains as Labour decries insecurity,

Nigeria's labour movement marked International Workers' Day 2025 under unprecedented strain, with union leaders denouncing a perfect storm of insecurity, hyperinflation, and structural economic pain that has hollowed out real wages across the nation's formal and informal sectors. The discontent signals a critical juncture: labour unrest typically precedes wage-price spirals, currency pressure, and political instability—all material risks for foreign direct investment and portfolio flows into Africa's largest economy.

### What Triggered Labour's May Day Alarm?

The convergence of three shocks has destabilized worker purchasing power. First, insecurity in the North and Middle Belt has disrupted agricultural supply chains, pushing food inflation to double digits while wage growth stagnates near 15% annually—a real wage *decline* of 5–7% year-over-year. Second, the naira has depreciated 45% against the dollar since January 2023, inflating import costs for fuel, pharmaceuticals, and machinery. Third, while President Tinubu's February 2023 subsidy removal eliminated a fiscal drain, it compressed household budgets: petrol prices quintupled, transport costs surged, and informal sector earnings collapsed as demand destruction rippled through the economy.

Labour unions are now framing subsidy removal not as necessary fiscal reform but as an unfinished social contract—one that promised reinvestment in infrastructure, schools, and security, but delivered austerity. This framing matters. It reshapes how workers perceive structural adjustment, potentially hardening political resistance to further liberalization measures critical to IMF programmes and debt sustainability.

### The Economic Mirage of Subsidy Removal

Recent analysis from Nigeria's fiscal intelligentsia has crystallized a counterintuitive truth: subsidy removal alone does *not* generate a fiscal windfall. It removes a distortion and corrects a mispricing. The 2.5 trillion naira freed annually has been largely consumed by debt servicing (now 97% of government revenue) and recurrent spending, leaving minimal room for the capital investment in ports, power, and security that would validate the reform's social cost.

Investors should note: when labour perceives reform as economically *hollow*—a transfer from workers to creditors without tangible productivity gains—wage militancy rises. Nigeria saw this movie in the 1980s and 1990s. Wage-price spirals, informal sector exit, and brain drain follow.

## How Does Labour Unrest Affect Foreign Investment?

Labour instability raises operational costs: firms must offer wage premiums to retain talent, negotiate with unions, and hedge against strikes. It also signals governance risk. When governments cannot credibly commit to reform *sequencing*—i.e., subsidy removal *paired* with spending on security and services—investors demand higher risk premiums. Naira weakness will likely persist.

## Will Nigerian Labour Escalate Pressure in 2025?

Union leaders have historically escalated incrementally: warnings → slowdowns → work-to-rule → strikes. The May Day message suggests an intent to push President Tinubu's administration toward fiscal reallocation *before* June's mid-year review. If demands are ignored, expect industrial action by Q3 2025.

The baseline scenario: labour turbulence remains elevated but episodic, wage inflation accelerates to 18–22%, and currency depreciation continues at 3–5% monthly. This erodes equity returns and narrows the real-term arbitrage for USD-denominated investors.

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