The Effect of Labour Cost on the Corporate Performance of NGX-Listed Firms in Nigeria

Labour cost management remains a critical yet poorly disaggregated dimension of corporate financial strategy in Nigeria's manufacturing sector. While personnel expenditures constitute a substantial portion of operating costs, prevailing research treats labour costs as a single aggregate, masking the distinct performance implications of base salaries, statutory pension remittances and training investments. This investigation addresses the gap through retrospective analysis of panel data drawn from ten manufacturing firms listed on the Nigerian Exchange Group over ten years (2015–2024). Random Effects regression models selected via Hausman specification tests assess relationships between disaggregated labour cost ratios and dual performance metrics: operating profit margin and earnings per share. Findings reveal asymmetric effects. Salary intensity demonstrates robust negative associations with both operating profit margin (β = –0.450, p < 0.001) and earnings per share (β = –1.580, p < 0.001), signaling margin erosion when compensation growth outpaces productivity. Statutory pension contributions correlate positively with operating profit margin (β = 0.165, p = 0.006) and earnings per share (β = 0.935, p < 0.001), suggesting compliance functions as a strategic lever for workforce stability rather than a mere regulatory burden. Training expenditures show a negligible contemporaneous impact on operational efficiency (β = –0.033, p = 0.803) yet significantly enhance earnings per share (β = 1.410, p = 0.001), positioning capability development as a medium-term value driver. The evidence underscores that performance outcomes hinge not on aggregate labour spending but on its strategic composition. Firms optimizing compensation-productivity alignment, honouring pension obligations consistently and sustaining training investments with multi-year return horizons position themselves for superior profitability and shareholder returns within Nigeria's margin-constrained manufacturing environment.