The Nigeria Labour Force Survey published by the National Bureau of Statistics (NBS) indicates that only 26.3 per cent of Nigerian workers had access to a pension plan and health insurance in 2023. This figure highlights a significant gap in social protection for the country’s workforce.
According to the report, Zamfara State in the Northwest region recorded the highest percentage of employees with both health insurance and pension plans, standing at 65 per cent. In stark contrast, Abia State had the lowest representation, with only 3.9 per cent of wage employees covered by these essential benefits. The report specifically notes, “The percentage of employees entitled to either pension or health insurance schemes in Nigeria was 26.3 per cent. Zamfara State had the highest at 65.9 per cent, while Abia had the lowest at 3.9 per cent among wage employed.”
The low enrollment in pension and health insurance plans is largely attributed to the overwhelming presence of informal sector workers in Nigeria. The survey reveals that about 92 per cent of Nigeria’s employed population is engaged in informal employment. This sector encompasses businesses characterised by open entry and exit, minimal market regulation, and operations based on market forces without formal oversight. Informal enterprises typically lack established organisational structures, face inconsistent earnings, and often do not offer social benefits such as pensions or health insurance. Additionally, many of these businesses do not maintain proper records, further complicating efforts to provide employee benefits.
The International Monetary Fund (IMF) reports that Nigeria’s informal sector contributed 57.7 per cent to the country’s Gross Domestic Product (GDP) in 2022, underscoring its crucial role in the economy. However, millions of Nigerians working in this sector remain excluded from traditional pension systems, which leaves them vulnerable to financial insecurity in retirement.
Employee benefits, including health insurance, pensions, annual leave, and work-life balance initiatives, are vital for enhancing job satisfaction. Access to these benefits can lead to improved productivity and increased employee loyalty.
The Pension Reform Act mandates that employers with at least 15 employees participate in a contributory pension scheme. Under this scheme, employers are required to contribute a minimum of 10 per cent of an employee’s monthly salary, while employees contribute up to 8 per cent.
Similarly, the National Health Insurance Authority Act requires that health insurance be provided for all employees residing in Nigeria. Employers with more than five staff members must enroll in a health insurance scheme, ensuring contributions are made to the public health insurance scheme of the state where they operate. Alternatively, employers can opt to provide private health insurance for their employees under the same act.
Despite these regulatory frameworks, enrollment in health insurance remains low compared to the total population. According to the National Health Insurance Agency (NHIA), approximately 18.7 million people are currently enrolled in health insurance, highlighting a significant gap in coverage for the majority of Nigerians.
